2011
Länsförsäkringar Liv
Annual Report
Contents
Länsförsäkringar Liv in brief
Länsförsäkringar Liv is the Länsförsäkringar Alliance’s life-assurance company for
­traditional management, primarily for occupational and private pensions. The company
also conducts non-life insurance operations in the form of direct medical and accident
insurance. The company is operated in accordance with mutual principles, which entails
that the earnings are not distributed to the owner; they remain with the customers.
This is Länsförsäkringar
Länsförsäkringar comprises 23 local and customer-owned regional insurance companies
and the jointly owned Länsförsäkringar AB. Customers are provided with a complete
offering of banking and insurance services through the regional insurance companies.
Animal and crop insurance is offered through Agria Djurförsäkring and total solutions for
reliable mortgage transactions are offered through Länsförsäkringar Fastighetsförmedling. The basis is local presence and decision-making – experience has proven that
local decision-making authority combined with joint strength create substantial added
value for customers. Long-term respect for customers’ money is also fundamental to
Läns­försäkringar. There are no external shareholders and it is not Länsförsäkringar’s
money that is being managed but its customers’. This approach characterises the entire
business. Länsförsäkringar has almost 3.4 million customers and approximately 5,800
employees.
23 regional insurance companies
Länsförsäkringar AB
Länsförsäkringar Liv Försäkrings AB
HWH Katsan KB
Länsförsäkringar Komplement AB
Fastighets KB Automobilpalatset
KB Plutonia
KB Hålstenen
Fastighets AB Sprängaren 8
Fastigheten Dykarhuset AB
Fastighets AB Apelsinen 5
KB Cirkusängen
Fastighets AB Storsundet
– FAB Solnaaprikosen 3
– FAB Solnasmultronet 2
– FAB Cirkusstenen
2 President’s comments
5 Board of Directors’ Report
10 Proposed appropriation of profit
11 Five-year summary
13 Income statement
13 Statement of comprehensive income
14 Performance analysis
16 Balance sheet
18Statement of changes in
shareholders’ equity
18 Cash-flow statement
19 Notes
53 Auditor’s report
54 Corporate Governance Report
57 Board of Directors and auditors
58 Group management
59 Definitions
60 Addresses
2011
IN BRIEF
Net loss for the year for the Group
amounted to SEK 13,063 M
­(profit: 3,716).
Investment income, net, was
SEK 4,530 M (7,654).
The solvency ratio for traditional
life assurance on December 31,
2011 amounted to 111% (141)
and collective consolidation to
109% (107.0).
The total return for life-assurance
customers with traditional management amounted to 6.5% (4.1),
a result that compares favourably
with competitors and was attributable to high fixed-income
returns.
New sales of traditional management were discontinued during
the year.
The average bonus rate in 2011
was 4% (6.2). The average bonus
rate since Länsförsäkringar’s lifeassurance operations were
started in 1985 is 8.6%.
länsförsäkringar liv 2011 1
President’s comments
Caution and measures
safeguard savers’ investments
2011 was a difficult year for Swedish lifeassurance companies. The European debt
crisis and its impact on stock-market and
interest-rate trends throughout the world
were substantial. The effect on Länsför­
säkringar Liv was highly significant and
meant that we were forced to take robust
action to safeguard our savers’ investments. Our interest-rate sensitive guarantee products combined with sharply falling
long-term interest rates led to Länsförsäk­
ringar Liv discontinuing sales in September. We value our pension liability with the
policyholders using the long-term Swedish
government bond rate, meaning that the
liability increases when long-term interest
rates fall. The ten-year Swedish government bond rate fell dramatically from
slightly more than 3.5% in January to a
low of 1.54%. Consequently, our pension
liability increased substantially in a very
short space of time and had an adverse
impact on our key figures. However, with
a cautious approach and firm action, we
could end the year on a successful note.
New sales declined slightly in 2011 compared with 2010. Primarily independent
brokers performed below expectations.
Total premium income remained
unchanged, which is a strength.
Our administration gains, which reflect
the earnings of the company’s operations,
were positive. Our delivery times of various
insurance cases were highly satisfactory.
As in the preceding year, we were the
best company for corporate customers,
according to the Swedish Quality Index.
Management earnings
The total return in the traditional management portfolio was 6.5% – a strong and
competitive return level in this market con-
2 länsförsäkringar liv 2011
text. There are two main reasons for the
2011 return being so positive. As early as
mid-June we deemed the stock-market outlook to be uncertain and took measures to
reduce exposure. Equities were gradually
sold to reduce the risk in investments.
Accordingly, our result for equities was a
relatively small loss, despite the sharp
decline in the stock market. At the same
time, we increased the duration of the fixedincome portfolio to better match the longterm liability and the value of these investments rose in line with falling interest rates.
Our property and private equity portfolios
also posted positive returns.
Our traditional-management savers had
an average bonus rate in 2011 of 4.1%. We
reduced the bonus rate gradually during the
year, from 7% to a low of 0%. Our strained
key figures in the autumn promoted us to
adopt a cautious approach and we therefore
chose a bonus rate of 0% despite our
favourable collective consolidation, given
the economic climate.
The Nya världen management form,
which is a statistically allocated product
with 70% invested in various equities market, generated a return of negative 3.8%.
Market
Major changes are taking place in the
Swedish life-assurance market. The large
procurement rounds taking place in collective-agreement occupational pensions have
changed the playing field for the industry.
Market shares have shifted considerably
towards the companies that manage the
funds for those not making an active choice
of pension agreement. To date, the own
companies of the parties in the labour market have become the fund-manager companies of those not making an active choice.
More than 50% of people are not active in
their choice of pension agreement, which
transfers large amounts of capital to such
companies.
The procurement processes were characterised by intense price pressure, marginal
advisory services, few potential suppliers
for savers and short agreement periods.
There is, however, a trend towards changing the procurement rules and making the
process more flexible. For example, in
some agreement areas we would like see
that many more companies are able to be
included in the process as long as certain
fundamental requirements were accepted.
This is a step in the right direction.
The deferred income that a pension comprises is an essential part of the population’s
and savers’ future quality of life. Accordingly, it is important that focus is not targeted to only the fees involved. The potential for high returns, the option of selecting
the best alternatives in the market and having access to advisory services in these
complicated issues are equally as important. This overall approach and flexibility
should feature heavily in future procurement processes.
There are two other key issues being
­discussed that may have a significant effect
on the various parties in the industry.
The first issue involves the statutory
transfer option. In this matter we are awaiting the results of the Life Assurance Inquiry,
which was appointed by the Swedish government and are expected in the summer
of 2012. The transfer option is positive if
market players are treated equally, the regulations combat irresponsible market­ing and
the interests of customers who choose not
to transfer are protected. It will increase
flexibility and security for customers.
The second issue that is receiving
a­ ttention is the debate surrounding the
­prohibition on commission for brokers.
An independent broker should not receive
remuneration included in the products
via the insurance company but from the
customer who the broker represents. That
would be the normal practice for advisors
and consultants.
The debate is intense and various stakeholders have made their strong opinions
known. The situation is not black or white
in the sense that the current situation is bad
and unclear for customers and it would be
much better with a new model. The most
important aspect, regardless of the changes
made, is that customers understand what
they receive for the fees they pay, be it commission or other fees included in the products. It is not as simple as all advisory serv­
ices or sales are commission-based. However, it is vital that transparency and customer understanding increase and this
places demand on all players in the market.
Economic environment
We are increasingly affected by regulatory
changes. The new capital adequacy system,
Solvency II, is currently the main framework in the spotlight. The authorities, often
backed up by the EU, have a clear opinion
that the insurance industry needs to
strengthen its control levels and reporting
structure, have better control of its risks and
increase its capital to safeguard commitments with customers.
We welcome this standpoint since it will
enhance security for customers. We are
working intensively on the preparations for
Solvency II. However, it is worth noting that
producing and maintaining these structures
involves major expenses, which customers
have to pay. On the other hand, customer
requirements and expectations entails that
excessive limitations cannot be made on risk
taking to generate high returns. Despite this,
I believe that in many respects we already
have a satisfactory control environment in
place and a detailed risk analysis process,
and that customers can feel secure. But the
conclusion is that yield requirements and
customer yield expectations must be lower
in the forthcoming solvency regulations.
jörgen svensson, president länsförsäkringar liv
Solvency II will lead to improvements
and greater clarity in both the governance
of the operations and in the reporting structure, as well as its quality. The ultimate
objective of Solvency II is to enhance security for customers and thereby clear customer value.
The financial markets and the trends in
these markets going forward are, of course,
highly important to the company. Today we
have a situation whereby 80% of our assets
are in interest-bearing investments with
long terms to match our commitments. The
guarantee product for which the underwriting of new sales was discontinued remains
interest-rate sensitive and with a long duration. Accordingly, the liabilities must be
matched with the right mix of assets in this
relatively strained situation. As a result,
the very high interest-rate sensitivity of the
investments will remain for the foreseeable
future.
With a low percentage of equities, which
was excellent for 2011, this means that we
cannot expect full leverage in the stockmarket upswings that may occur after pro-
longed and sharp falls. Nevertheless, we
maintain our opinion that situation is uncertain and the European debt crisis will continue to influence the financial markets in
2012. Consequently, we will continue to
pursue our cautious approach.
Strengthening the company’s key figures
is a long-term effort. The measures we
undertook in 2011 had positive effects on
our financial strength. We will remain cautious about taking risks that may jeopardise
our solvency and thus our customers’ assets
or guarantees. Customers can and should
feel secure in their investments with us.
Jörgen Svensson
President of Länsförsäkringar Liv
länsförsäkringar liv 2011 3
4 länsförsäkringar Liv 2011
Board of Directors’ Report
The Board of Directors and the President of Länsförsäkringar Liv Försäkringsaktiebolag (publ), Corporate Registration Number 516401-6627, hereby submit the Annual Report and consolidated financial
statements for the 2011 fiscal year.
Ownership and Group structure
Länsförsäkringar Liv Försäkringsaktiebolag is a wholly owned
subsidiary of Länsförsäkringar AB (Corporate Registration Number 556549-7020), which is owned by 23 customer-owned regional
insurance companies and 14 local insurance companies. The company is operated in accordance with mutual principles, which
entails that the earnings are not distributed to the owner; they
remain with the customers. The company is not consolidated in the
Länsförsäkringar AB Group. The Länsförsäkringar Liv Group
(referred to below as the Länsförsäkringar Liv Group) comprises
the Parent Company (Länsförsäkringar Liv), and a number of property management subsidiaries. The subsidiary Länsförsäkringar
Fondliv Försäkringsaktiebolag (Länsförsäkringar Fondliv) (Corporate Registration Number 516401-8219), which conducts unitlinked insurance operations, is included in the earnings until the
date of divestment on October 31, 2011.
Focus of operations
Länsförsäkringar Liv is licensed to conduct life assurance and
­medical insurance operations, as well as non-life insurance
­operations in the form of direct medical and accident insurance.
Länsförsäk­ringar Liv manages pension savings with traditional
management, Nya världen management and Försäkrad pension
valued at SEK 114 billion.
Market
The financial markets experienced extensive turmoil in 2011 and
interest-rate falls in Sweden were extreme. Long-term market
interest rates declined to historically low levels at the end of 2011.
The trend in interest rates affected the traditional life assurance
industry as companies’ technical liabilities were discounted by the
market interest rate. Liabilities increase when the rate falls. The
effect of the discounting increases if the duration of the company’s
technical reserves is long, which is the particular case for Länsförsäkringar Liv.
In parallel with the decline in Swedish long-term market interest
rates, the trend on the stock market was also negative. The stockmarket decline was an additional burden on earnings and key figures with assets falling in value and thereby a weaker ratio between
assets and liabilities. Due to the low percentage of equities during
major parts of 2011, the negative stock-market trend had a relatively minor impact on Länsförsäkringar Liv.
Trends in the financial markets led to the company undertaking a
series of steps to limit the negative consequences on the company’s
financial strength caused by these trends. Länsförsäkringar Liv followed a predetermined action plan for such situations. This
involved gradual sales of the liquid portions of the company’s
equity portfolio, and increasing the duration of the assets side by
purchasing long-term bonds and through derivative contracts. At
year-end 2011, the investment assets in Länsförsäkringar Liv
largely comprised long-term interest-bearing assets.
Total premium income in 2011 amounted to SEK 6,514 M, compared with SEK 6,700 M in 2010. Most premium income is derived
from occupational pensions and savings in endowment insurance.
The occupational pension market increased 1.2%, while savings in
endowment insurance fell 22%. The positive trend in the occupational pension market is largely attributable to the stable economic
situation for Swedish businesses during most of the year. However,
the endowment insurance market was negatively impacted by turmoil in the financial markets during the second half of 2011. There
was also a great deal of uncertainty surrounding future taxation
rules for savings in endowment insurance. In late autumn, 2011, the
Riksdag (the Swedish Parliament) made a decision concerning a
new form of savings, an investment savings account, of which the
product properties largely complied with those of endowment
insurance. A decision was also made to raise the yield tax for savings in endowment insurance. Combined, the changes are expected
to have a negative impact on the endowment insurance market.
Länsförsäkringar Liv’s market share of new sales amounted to
10% (6.1). In 2010, many people selected the SAF-LO collective
agreement pension, which substantially increased the market share
for AMF as a company that manages funds for savers who do not
make an active choice. This led to downward pressure on market
shares for Länsförsäkringar Liv in 2010. This is because Länsförsäkringar Liv can only be selected in traditional insurance in
occupational pension agreements for ITP and SAF-LO. In the market for non-collectively agreed occupational pensions, the market
share of new sales for Länsförsäkringar Liv increased 11% (13.6).
Significant events during the year
Discontinuation of underwriting new policies under
traditional management
On September 6, Länsförsäkringar Liv discontinued the underwriting of new insurance policies under traditional management in a
bid to improve its strained key figures. Existing traditional-man-
länsförsäkringar Liv 2011 5
agement customers can continue their savings on the same terms as
previously. One of the reasons for these changes was to safeguard
savings for those people who currently save with traditional management. The company’s traditional insurance has provided a
favourable return over time, but when market interest rates lie at
record-low levels, new sales of products with long guarantees has a
negative impact on management.
many respects, are manifested as substantially more detailed rules
than the currently applicable provisions. The timeframe for Solvency II has been postponed by the EU body. The most recent proposals entail that the insurance companies must submit certain
information according to the Solvency II regulations during 2013,
but that the new material regulations are not expected to apply until
2014.
Sale of subsidiary
Key events after the end of the fiscal year
In conjunction with the discontinuation of traditional management,
a decision was made to sell the unit-linked life assurance company
from Länsförsäkringar Liv to Länsförsäkringar AB. The date of
divestment was October 31, and the sale strengthened the company’s key figures.
Underwriting of Nya världen discontinued
Life Assurance Inquiry
The Swedish government appointed a Life Assurance Inquiry in the
autumn of 2010. The Inquiry focuses on four issues: the transfer
option, surplus management in mutual insurance companies, the
influence of policyholders in hybrid companies and the conditions
for restructuring into profit-distributing operations, and has been
extended to the spring of 2012.
Change to advance ruling from Swedish Board of Advance
Tax Rulings
On June 10, 2011, the Supreme Administrative Court announced its
judgment entailing that it had changed the advance ruling from the
Swedish Board of Advance Tax Rulings, and stated that the unitlinked life assurance company was not to recognise income in the
form of portfolio commission for taxation in accordance with the
Swedish Income Tax Act.
As of February 2012, it will no longer be possible for corporate
customers with occupational pensions under the Friplan to begin
saving in the Nya världen management form. On April 1, 2012, the
company will also discontinue new savings in the other products
where Nya världen management has been available. Discontinuing
Nya världen for new pension customers will entail lower costs,
which improves circumstances for Länsförsäkringar Liv and thus
for savers.
Expectations regarding future development
The discontinuation of new sales of traditionally managed products
reduces the company’s administrative expenses, while sales of
unit-linked life assurance strengthen the company’s financial position and enhance return opportunities. Reducing the bonus rate will
also have a positive effect on key figures in the long term. All measures generated the expected and positive effects on both earnings
and key figures, although key figures for remained weak, which is
why the company is continuing to focus on efficiency enhancements and risk.
A cautious investment portfolio with a low proportion of equities and a high proportion of interest-bearing instruments is
expected in the near future.
New reporting standard for insurance contracts
The insurance industry had been promised a new accounting stand­
ard for insurance contracts, IFRS 4, by June 2011. Due to the many
objections made to the IASB’s proposal, the standard was not completed in 2011. The new time schedule does not include a date for
when the new reporting standard will be completed. Instead, the
IASB plans to present a revised draft in the spring of 2012, with
earliest application from 2015. The proposal, presented in 2010, is
a comprehensive accounting model for insurance contracts and is
expected to have a significant impact on companies issuing insurance contracts. In addition to changes to accounting policies, the
proposals may also affect systems, data, processes and broader
business aspects.
Solvency II – risk-based regulatory requirements from 2014
The EU reached an agreement on the modernisation of regulatory
requirements for insurance companies, known as Solvency II, in
2009. These new rules place more rigorous demands on companies’
risk management. Also, the rules stipulate that the requirements for
minimum buffer capital placed on insurance companies will be significantly more closely linked to the size of the company’s risks.
Regulatory changes are extensive, affect a number of areas and, in
6 länsförsäkringar Liv 2011
Risks and risk management
Ensuring that Länsförsäkringar Liv can meet its customer undertakings with a satisfactory margin is essential. The management of
risk-taking shall contribute to the provision of financial products at
a controlled risk level with a reasonable return. This forms the basis
of Länsförsäkringar Liv’s overall risk management process, see
also Note 2 Risks and risk management.
Employees
The company’s vision and values, combined with the task from the
regional insurance companies, serve as a guide for the entire business operations. Motivated and competent employees are vital to
having satisfied customers and achieving overall objectives. Structured HR activities are necessary for this and for ensuring access to
competencies in the short and long term. Consequently, the joint
HR processes also safeguard opportunities for positively developing the Group’s companies in line with the owners’ ambitions.
Employees participate in a structural business control process,
which includes an established business planning model. A performance management model that links the targets for short and longterm employee performance to the objectives of the business plans
is in place to connect the business planning process to employee
performance. Long-term management supply is ensured by identifying individuals with the drive and capacity to attain senior managerial positions within three years.
Individual targets for employees are identified in discussions
between employees and their managers. Coupled with expected
behaviour and based on shared values, these targets comprise the
overall performance expectations that are documented in the
employee’s target contract. Future work duties, career aspirations
and professional roles are discussed every year in a bid to make
employees more active in the planning of their own skills development and career planning.
An employee survey, which measures employee perceptions of
performance conditions, is carried out annually. The results of the
survey are used both as a benchmark and to further improve performance conditions.
Employees at Länsförsäkringar Liv are to have market-based
terms of employment. The structure and level of remuneration
should correspond to the Group’s values, meaning that it should be
reasonable, moderate and well-balanced, and also contribute to
good ethics and organisational culture, characterised by openness
and transparency.
The base of the remuneration model comprises fixed remuneration, meaning a fixed cash monthly salary. Target-based remuneration is a supplement to fixed remuneration and may be paid to
employees who are not managers, and is currently maximised at
SEK 12,000 per year per employee. A basic prerequisite for targetbased remuneration is that Länsförsäkringar AB posts positive
financial results. At least one third of the target-based remuneration
is based on exceeding the overall targets of the business plans and a
maximum of two thirds on exceeding individual targets. Only fixed
salaries are paid to the members of company management and
managers.
Personnel, salaries and remuneration
Information regarding the average number of employees, salaries
and remuneration, as well as details concerning salary and other
remuneration to senior executives, are provided in Note 10
Employees, staff costs and remuneration to senior executives. In
accordance with the regulations and general advice of the Swedish
Financial Supervisory Authority (FFFS 2011:2) regarding remuneration policies in insurance companies, stock exchanges, clearing organisations and institutes for issuing electronic money, the
Board of Directors adopted a remuneration policy. It is intended
that a statement of remuneration in the company be published on
the website when the Annual Report is adopted.
Environment
Environmental considerations are a part of sustainable enterprising
for the Länsförsäkringar Liv Group. The company works continuously to reduce its environmental impact in line with its environmental policy and has identified areas that have a negative effect on
the environment. Business travel contributes to emissions of the
greenhouse gas, carbon dioxide. To reduce the environmental
impact, train travel is increasingly used for business trips according
to applicable travel guidelines. Company cars are 100% environmentally friendly cars according to the company’s definition of
environmentally friendly cars. The company has also installed
charging stations for electric cars in its own car parks to stimulate
the transition to cars that do not operate on fossil fuels. Another priority area is paper dispatches. Digital solutions are being developed
to reduce paper consumption and the development of the Internet
channel provides many opportunities to reduce paper dispatches
while simultaneously improving information quality.
Two environmental audits are performed every year to ensure
constant improvements to environmental activities. Länsförsäkringar Sak holds ISO 14001:2004 certification.
Earnings and financial position
Net loss in the Group amounted to SEK 13,063 M (profit: 3,716)
and the loss in the Parent Company amounted to SEK 16 012 M
(profit: 4,044). The negative outcome for 2011 was due to sharp
falls in long-term interest rates. Interest-rate changes impacted
earnings due to the technical liabilities in traditional management
being discounted by the market interest rate. Long-term market
interest rates fell sharply in mainly the third quarter, thus increasing
liabilities and weakening earnings. Positive investment income and
risk and administration gains also had a counteracting effect.
The target of achieving an administration gain in Länsförsäkringar Liv was attained in 2011. Income on par with the preceding
year and costs in line with set targets have led to an administration
gain of SEK 40 M (95).
Risk-related transactions in Länsförsäkringar Liv continue to
generate a positive result, amounting to slightly more than SEK 1
billion, measured in premium income. The majority of risk-related
transactions comprise medical and premium exceptions while the
remainder comprise mortality risk.
The risk-cover capacity that provides suitable protection for customers is ensured by Länsförsäkringar’s own retention and an
extensive reinsurance programme. The reinsurance programme
comprises an obligatory component whereby a certain quota of
transactions is automatically reinsured, and a voluntary component
whereby individual risks are reinsured, and catastrophe insurance
in the event of a unique major event. Part of the reinsurance programme is managed internally within the Länsförsäkringar Alliance.
Länsförsäkringar Fondliv contributed SEK 137 M (132) to earnings until the date of divestment on October 31.
Premium income
The Group’s premium income for own account including income
from investment agreements amounted to SEK 6,514 M (6,700).
Business volumes declined slightly due to the sale of Länsförsäkringar Fondliv and the discontinuation of new sales.
The Länsförsäkringar Liv Group also had a positive net inflow
in the contract areas for which customers have the option of transferring their insurance capital. Total premium income as defined by
the Swedish Insurance Federation amounted to SEK 13,048 M
(12,893). This represents a 1% (9) increase compared with the
länsförsäkringar Liv 2011 7
same period in the preceding year. The increase is attributable to
higher premiums paid in the Occupational pension product group.
Claims payments
Disbursed claims payments after ceded reinsurance in the Länsförsäkringar Liv Group amounted to SEK 5,363 M (4,595). The
change was attributable to higher pension payments.
was attributable to high fixed-income returns in terms of both the
company’s strategies to hedge interest and investments in loans.
The holdings in unlisted shares and property also made a positive
contribution to returns. Holdings in listed shares made a negative
contribution to returns during the first six months of the year, and
this risk was subsequently reduced by selling listed shares.
Management model focusing on risk
Change in technical reserves
Technical reserves amounted to SEK 104,572 M (81,700). This
substantial increase was mainly the result of a significantly lower
discount rate since the market interest rates on Swedish government bonds have fallen to historically low levels. In other respects,
some significant changes were implemented whereby future costs
and tax are now accounted for in projected cash flows rather than as
a reduction of the discount rate, and cancellation assumptions have
been included in the calculation of provisions. Over time, both of
these changes lead to a fairer determination of the technical
reserves, particularly in periods with extremely low interest rates.
Surpluses in the Nya världen management form are now reserved
in the form of conditional bonus. This had an adverse impact of
SEK 4,020 M on equity.
Operating expenses
Operating expenses are higher compared with the preceding year
and amounted to SEK 1,462 M (1,350). Expenses for efficiency
projects in Länsförsäkringar AB and costs for adjustments to forthcoming regulations arose during the year. A non-recurring cost in
the form of compensation to the regional insurance companies for
the discontinuation of traditional management also had an adverse
impact on operating expenses. Long-term measures to optimise the
organisation and enhance the efficiency of processes have already
and are expected to continue lowering operating expenses.
Tax
Deferred tax on unutilised loss carryforwards, which were previously capitalised in Länsförsäkringar Fondliv, have been dissolved
for the period since it will not be possible to utilise them within the
foreseeable future, according to a new forecast based on new circumstances arising from a decision by the Supreme Administrative
Court. Reserved tax on income from portfolio commission has also
been dissolved, as a direct result of the Supreme Administrative
Court’s decision. The net effect of the Group’s total tax comprises
income of SEK 19 M.
Asset management
Net investment income amounted to SEK 4,530 M (7,654) including change in value of investment assets for which the life-assurance policy holder bears the investment risk, which amounted to a
decrease of SEK 6,539 M (increase: 2,874). During the year,
investment assets in the Länsförsäkringar Liv Group increased to
SEK 113,920 M (105,872). The total return of the traditionally
managed portfolio was 6.5% (4.1), a result that compares favourably with other traditional life-assurance companies. This result
8 länsförsäkringar Liv 2011
The aim of management is to generate high returns on policyholders’ money based on an acceptable risk level. Accordingly, Länsförsäkringar’s traditional life-assurance works continuously on
developing its model to ensure that efficient management. This
applies to the choice of investment assets and the methodology and
approach applied. The portfolio structure for market exposure
focuses on dynamically selecting the asset allocation desired in the
portfolios according to risk-assumption capacity.
The strategy involves reducing active management mandates in
markets that are broad, transparent and efficient and instead implementing simple and inexpensive passive solutions for capturing
market exposure. Due to the volatile asset allocation, the portfolios
were rapidly adapted to market changes.
The principle of a long-term approach to the life-assurance company’s management is supplemented with a high level of marketrisk control applicable to the entire balance sheet. Safeguarding
current key figures must be continuously balanced against ensuring
the long-term perspective of management. In the short term, this
has impacted opportunities for Länsförsäkringar Liv to invest in
assets that are not tradeable in the short term, known as alternative
investments. During the year, the investment operations had to
adjust the risk level to the terms dictated by the balance sheet.
The derivative strategies are a way of protecting certain key figures. Derivative solutions are also actively utilised to hedge the
portfolios against different types of risks, such as the risk of unfavourable interest-rate changes. Such hedging is a common element
in the management of traditional life assurance and is undertaken to
render the balance sheet less susceptible to rising liabilities due to
falling interest rates.
Traditional life assurance
Traditional management provides a guaranteed annual return on
saved capital. Returns that exceed the guaranteed return are pre­
liminarily allocated to customers’ insurance policies in the form of
bonuses. In the event that the bonuses are lower than the guaranteed return, the preliminary distribution of the bonus is reallocated.
The total return in the traditional life assurance operations
amounted to 6.5% (4.1). The average bonus rate on traditionalmanagement insurance policies was 4% in 2011. The bonus rate
was lowered to 0% on November 1. The average bonus rate since
the life-assurance operations were started in 1985 is 8.6%.
Investments in traditional life assurance are primarily made in
listed shares and interest-bearing securities, as well as properties
and alternative investments. On December 31, 2011, 9% (33) of
pension savers’ money was invested in equities, 79% (47) in interest-bearing securities, 6% (6) in properties and 4% (7) in alterna-
tive investments. In addition, 0% (6) of the portfolio comprised
investments in Länsförsäkringar Fondliv. In 2011, the return for the
various asset classes was as follows: equities negative 7.6% (pos:
8.9), interest-bearing securities 11.2% (4.2), properties 5.7% (4.5)
and alternative investments 0.5% (8.1).
Nya världen
The Nya världen management form is suitable for those customers
who want to combine security with opportunities for high returns in
the equities market. One portion of returns is guaranteed and
another portion is based on trends in the equities and fixed-income
market. After five years, or death, there is always the guarantee that
the saver will recover the money they invested, with a deduction
for calculated expenses and tax. Nya världen is usually structured
as follows: 70% equities and 30% interest-bearing securities. The
relatively large share of equities increases opportunities for high
returns in the long term. Nya världen shareholdings are spread
throughout the world to have as little dependence on individual
markets as possible. The total return for Nya världen amounted to
negative 3.8% (8.9).
Försäkrad pension
Försäkrad pension is Länsförsäkringar Liv’s product for private
pension savings. Försäkrad pension provides opportunities to profit
from stock-market upswings, while protecting from stock-market
slumps. Savings comprise a bond that extends until the year in
which the saver plans to retire and a fund for which the return level
depends on the trends of global stock exchanges. As a result, the
savings perform differently depending on the saver’s age.
Unit-linked insurance
The Länsförsäkringar Fondliv subsidiary was divested in October
to Länsförsäkringar AB, after which the Länsförsäkringar Liv
Group no longer offered unit-linked insurance. Länsförsäkringar
Fondliv’s fund range comprised 30 funds under Länsförsäkringar’s
own brand and about 40 external funds, totalling approximately 70
funds. Funds under the own brand are found in Länsförsäkringar’s
own mutual fund company and are administered by carefully
selected external managers.
TOTAL RETURN TABLE
Total return, %
Market value,
Dec. 31, 2011
%
Market value,
Dec. 31, 2010
%
Interest-bearing
11.2
87,681
80.7
51,402
49.1
Equities
Investment assets in traditional management, SEK M
–7.6
10,468
9.6
34,796
33.2
Alternative investments1)
0.5
4,004
3.7
7,745
7.4
Property
5.7
6,496
6
6,262
6.0
Other (incl. Fondliv)
–23.8
0
0
6,652
6.3
Liability protection2)
–
–
–
–2,101
–2.0
6.5
108,649
100
104,756
100
Total
RECONCILIATION TOTAL RETURN TABLE WITH BALANCE SHEET
Dec. 31, 2011
Dec. 31, 2010
Land and buildings
1,480
1,442
Interest-bearing securities issued by Group companies and loans to Group companies
8,466
6,396
Shares and participations
18,900
36,664
Bonds and other interest-bearing securities
79,291
56,921
4,563
2,874
–
904
Derivatives
Other financial investment assets
Assets for conditional bonus
4,003
Cash and bank balances
7,279
Accrued interest and rental income
1,036
589
–2,118
–3,406
122,901
109,706
1,210
7,721
Derivatives, liabilities
Total
7,322
Adjustments
Market value, subsidiary
Market value, associated property company
338
341
–12,564
–13,065
Group account balance
–394
–1,118
Trading book
–608
–325
Other
–2,234
1,496
Total
108,649
104,756
Assets in Nya världen management
1) The valuation of alternative investments on December 31 is based on the most recent information from fund managers.
2) Contribution to total return.
länsförsäkringar Liv 2011 9
Optimised organisation
Five-year summary
The modern management method is supported by a suitably
adapted organisation. By outsourcing all operating management to
external managers, resources can be focused on the central areas of
asset allocation, risk management, alternative investments and
increasing the number of managers. The investment organisation is
supplemented with efficient administration and, naturally, efficient
control, monitoring and reporting.
The five-year summary is on page 11.
Solvency ratio
Group
Solvency is a measure of the financial position and strength of a
life-assurance company. It shows the value of the company’s assets
compared with the company’s guaranteed commitments to customers. Länsförsäkringar Liv’s solvency ratio was 110.6% (141.2) on
December 31, 2011. The company’s interest-rate sensitive guarantee products combined with sharply falling long-term interest rates
led to a significantly lower solvency ratio (refer to Note 2 Risks and
risk management).
Total equity for the Group amounted to SEK 10,851 M at year-end.
No provision to restricted reserves in the subsidiaries is proposed.
Collective consolidation
Surplus in a traditional life assurance company can arise when the
assets are higher than the guaranteed interest rate. The surplus is
preliminarily distributed to customers in the bonus rate. One of the
key characteristics of traditional management is the balance bonus
technique. This technique entails that the return on policyholders’
capital does not immediately follow the return on equivalent assets.
A certain portion of the surplus is combined in the form of solvency
capital. The deficit is managed by redistributing the previous preliminarily distributed bonus with a bonus rate that is lower than the
guaranteed rate. Collective consolidation is a measure of a traditional life assurance company’s capacity to provide a bonus and
describes the market value of the company’s assets in relation to
the guaranteed commitments and the preliminary bonus allocation.
The measure is theoretical since it reflects a situation in which the
company would pay out the entire capital assured during a single
day. However, the shortest payment period for a traditional life
assurance is five years and the average maturity is about 20 years.
Collective consolidation at year-end 2011 amounted to 109.2%
(106.7).
10 länsförsäkringar Liv 2011
Proposed appropriation of profit
The proposed appropriations as specified below will be presented
to, and the income statement and balance sheet for the Group and
Parent Company will be adopted at, the Annual General Meeting in
May 2012.
Parent Company
In 2011, the recognised loss was SEK 16,012 M.
The Board of Directors and the President propose that net profit
for the year be appropriated as follows, SEK M:
Net loss for the year
–16,012
Total
–16,012
Of the above net amount, withdrawals from (–) and provision to (+)
the collective consolidation fund are proposed as follows, SEK M.
Defined-contribution occupational pension insurance
Occupation-linked medical insurance and premium exemption
Individual traditional life assurance
Non-cancellable medical and accident insurance and premium exemption
Group life assurance and employment group life assurance
Cancellable group accident insurance
Total
–8,972
315
–7,292
–62
1
–2
–16,012
Five-year summary
2011
2010
2009
2008
2007
Premium income for own account
6,514
6,700
Investment income, net
4,530
7,654
6,072
5,820
6,150
14,465
–17,596
–5,432
–4,354
–4,300
8,068
–4,245
–3,698
Earnings, Group, SEK M
Claims payments
Disbursed and balanced bonus
–1,669
–1,591
–1,719
–1,703
–1,592
Technical result for insurance operations
–12,226
4,670
19,001
–28,905
12,505
Net profit/loss for the year
–13,063
3,716
18,106
–30,126
11,361
Financial assets measured at fair value, Group
113,920
105,872
106,781
102,880
114,600
Technical reserves, net in the Group
106,316
83,446
83,115
97,200
79,924
10,981
34,065
30,997
14,022
40,788
483
1,964
1,510
791
7
107
65
40
8,772
6,397
6,111
5,020
13,080
10,981
34,065
30,997
14,022
40,788
4,580
3,652
3,622
4,215
3,534
10,981
33,224
25,409
9,240
34,138
4,582
4,203
4,093
4,491
3,955
Management cost ratio
0.6
0.6
0.9
0.8
0.7
Direct yield on assets in traditional management
7.7
4.1
2.3
3.6
4.2
Total return on assets in traditional management
6.5
4.1
2.3
–0.6
6.7
Total return on assets in Nya världen management
–3.8
8.9
24.3
–28.1
4.2
Collective consolidation
109
107
107
105
114
Solvency ratio
Financial position, SEK M
Solvency capital, Parent Company
Of which surplus value in Group companies and associated companies
Of which deferred tax
Collective consolidation capital, Parent Company
Capital base, Parent Company
Required solvency margin, Parent Company
Capital base for the insurance group
Required solvency margin for the insurance group
2,592 35 Key figures for Parent Company, % unless otherwise specified
111
141
137
114
152
Solvency rate, multiple
2.4
9.3
8.6
3.3
11.5
Bonus rate before tax and expenses
4.0
6.2
0.8
3.5
9.2
Endowment insurances (tax rate 27%)
3.25
5.33
–0.22
2.38
8.2 Pension insurances (tax rate 15%)
3.59
5.7
0.25
2.88 8.6
Bonus rate after tax, average:
länsförsäkringar Liv 2011 11
Financial statements
Income statement ................................................................. 13
Statement of comprehensive income..................................... 1 3.
Performance analysis............................................................ 14
Balance sheet ...................................................................... 16
Statement of changes in shareholders’ equity......................... 18
Cash-flow statement.............................................................. 18
Note 1
Accounting policies................................................ 19
Note 2
Risks and risk management................................... 24
Note 3
Premium income................................................... 29
Note 4
Investment income, revenue.................................. 29
Note 5
Unrealised gains on investment assets.................... 30
Note 6
Other technical revenue......................................... 30
Note 7
Claims payments................................................... 30
Note 8
Operating expenses............................................... 30
Note 9
Audit expenses...................................................... 30
Note 10
Employees, staff costs and remuneration
to senior executives................................................ 31
Note 11 Investment income, expenses................................ 33
Note 12 Unrealised losses on investment assets................... 33
Note 13 Tax........................................................................ 33
Note 14 Goodwill................................................................ 34
Note 15 Other intangible assets........................................... 34
Note 16 Investment property/Land and buildings................. 35
Note 17 Shares and participations in group companies........ 36
Note 18
Interest-bearing securities issued by group
companies and loans to group companies............... 36
12 länsförsäkringar liv 2011
Note 19
Shares and participations in
associated companies............................................ 37
Note 20 Shares and participations....................................... 37
Note 21 Bonds and other interest-bearing securities............ 37
Note 22 Derivatives............................................................. 38
Note 23 Assets for conditional bonus................................... 38
Note 24 Unit-linked insurance assets.................................. 38
Note 25 Other receivables................................................... 38
Note 26 Deferred acquisition costs...................................... 38
Note 27 Equity.................................................................... 39
Note 28 Life-assurance reserves.......................................... 39
Note 29 Provision for claims outstanding............................. 39
Note 30 Unit-linked insurance liabilities............................... 39
Note 31 Pensions............................................................... 40
Note 32 Other liabilities....................................................... 42
Note 33 Memorandum items............................................... 42
Note 34 Assets and liabilities per measurement category...... 43
Note 35
Net investment income,
per measurement category..................................... 48
Note 36 Recovery dates...................................................... 48
Note 37 Supplementary information about cash flows.......... 49
Note 38 Disclosures on related-party transactions................ 49
Board’s signatures................................................................. 52
Auditor’s report..................................................................... 53
INCOME STATEMENT
TECHNICAL RECOGNITION OF LIFE ASSURANCE OPERATIONS
SEK M
Group
Note
Parent Company
2011
2010
2011
2010
6,702
Premium income
Premium income before ceded reinsurance
3
6,554
6,724
6,536
Premiums for ceded reinsurance
–376
–404
–375
–402
Total premium income after ceded reinsurance
6,178
6,320
6,161
6,300
336
380
–
–
Income from investment agreements
Investment income, revenue
4
15,610
5,703
11,991
4,992
Unrealised gains on investment assets
5
3,557
1,892
3,481
1,882
–
2,874
–
–
352
389
–
–
–4,713
Increase in value of investment assets for which the life-assurance
policyholder bears the risk
Unit-linked insurance assets
Other technical revenue
6
Claims payments
Claims payments before ceded reinsurance
7
–5,487
–4,730
–5,472
Reinsurers’ portion
124
135
123
134
Total claims payments after ceded reinsurance
–5,363
–4,595
–5,349
–4,579
278
Change in provision for claims outstanding before ceded reinsurance
1
290
–3
Reinsurers’ portion
–71
–49
–70
–48
Total change in provision for claims outstanding after ceded reinsurance
–70
241
–73
230
Total claims payments after ceded reinsurance
–5,432
–4,354
–5,422
–4,349
Change in other technical reserves after ceded reinsurance:
Life-assurance reserve
–22,872
–712
–22,872
–712
Technical reserves for life assurance for which the policyholder bears the risk:
Conditional bonus
191
–56
191
–56
Unit-linked insurance liabilities
5,983
–3,565
–
–
Operating expenses
8,9,10
–1,462
–1,350
–917
–761
Investment income, expenses
11
–1,919
–2,435
–1,708
–2,098
Unrealised losses on investment assets
12
–6,179
–380
–6,179
–336
Decrease in value of investment assets for which the life-assurance
policyholder bears the risk
Conditional bonus
–54
–1
–54
–1
Unit-linked insurance assets
–6,485
–
–
–
Other technical expenses
–29
–37
–
–
Technical result, life assurance operations
–12,226
4,670
–15,328
4,862
4,862
NON-TECHNICAL RECOGNITION
Technical result, life assurance operations
–12,226
4,670
–15,328
Other non-technical expenses
–731
–750
–
–
Profit/loss before tax/ Profit/loss before appropriations and tax
–12,957
3,920
–15,328
4,862
Tax allocation reserve
Tax
13
NET PROFIT/LOSS FOR THE YEAR
–
–
–100
–160
–106
–204
–584
–658
–13,063
3,716
–16,012
4,044
2011
2010
2011
2010
–13,063
3,716
–16,012
4,044
statement of comprehensive income
Group
SEK M
Net profit/loss for the year
Parent Company
Other comprehensive income
Translation differences transferred to net profit for the year
–
–29
–
–
Total other comprehensive loss for the year
–
–29
–
–
–13,063
3,687
–16,012
4,044
Comprehensive income/loss for the year
länsförsäkringar liv 2011 13
PERFORMANCE ANALYSIS 2011
Direct insurance in Sweden
Occupational pension
SEK M Premium income before ceded reinsurance
Premiums for ceded reinsurance
Total premium income after ceded reinsurance
Investment income, revenue
Unrealised gains on investment assets
Medical insurance
and premium
exemption
Total
Definedcontribution
insurance
6,536
3,974
547
–375
–49
–204
6,161
3,925
343
11,991
5,707
221
3,481
1,653
64
–5,472
–1,980
–184
123
15
40
–5,349
–1,966
–144
Claims payments
Claims payments before ceded reinsurance
Reinsurers’ portion
Total claims payments after ceded reinsurance
Change in provision for claims outstanding before ceded reinsurance
–3
–
80
Reinsurers’ portion
–70
–
–69
Total change in Provision for claims outstanding after ceded reinsurance
–73
–
11
–5,422
–1,966
–133
–22,872
–13,995
3
191
176
–
–917
–496
9
Total claims payments after ceded reinsurance
Change in other technical reserves before ceded reinsurance
Life-assurance reserve
Technical reserves for life assurance for which the policyholder bears the risk
Conditional bonus
Operating expenses
Investment income, expenses
–1,708
–825
–31
Unrealised losses on investment assets
–6,179
–2,934
–114
–54
–
–
Decrease in value of investment assets for which the life-assurance
policyholder bears the risk
Conditional bonus
Technical result, life assurance operations
–15,328
–8,755
362
Tax allocation reserve
–100
–4
–47
Tax
–584
–213
0
–16,012
–8,972
315
571
–
429
104,572
51,523
7
2,340
8
1,060
106,912
51,531
1,067
4,003
–3,700
–
597
–
144
25,995
12,526
788
NET PROFIT/LOSS FOR THE YEAR
Run-off result
Technical reserves, before ceded reinsurance
Life-assurance reserves
Provision for claims outstanding
Total
Provisions for life assurance for which the policyholder bears the risk
Conditional bonus
Reinsurers’ portion of technical reserves
Provision for claims outstanding
Collective consolidation fund
14 länsförsäkringar liv 2011
PERFORMANCE ANALYSIS 2011, cont.
Direct insurance in Sweden
Other life assurance
SEK M
Premium income before ceded reinsurance
Premiums for ceded reinsurance
Individual
traditional
insurance
Assumed
reinsurance
Group life
Non-cancellable
assurance and
medical and
accident Employment group
life assurance
insurance
1,839
141
1
Cancellable
Group accident
insurance
34
0
–70
–53
–
–
–
Total premium income after ceded reinsurance
1,769
88
1
34
0
Investment income, revenue
5,849
196
2
15
0
Unrealised gains on investment assets
1,702
57
1
4
0
–3,119
–170
–2
–17
–
32
36
–
–
–
–3,087
–134
–2
–17
–
–67
–18
–
3
–
–
–1
–
–
–
–67
–20
–
3
–
–3,154
–154
–2
–14
–
–8,881
1
0
–
–
15
–
–
–
–
–413
12
0
–29
0
Claims payments
Claims payments before ceded reinsurance
Reinsurers’ portion
Total claims payments after ceded reinsurance
Change in provision for claims outstanding before ceded reinsurance
Reinsurers’ portion
Total change in Provision for claims outstanding after ceded reinsurance
Total claims payments after ceded reinsurance
Change in other technical reserves before ceded reinsurance
Life-assurance reserve
Technical reserves for life assurance for which the policyholder bears the risk
Conditional bonus
Operating expenses
Investment income, expenses
Unrealised losses on investment assets
–822
–28
0
–2
0
–3,021
–101
–1
–8
0
–54
–
–
–
–
–7,010
72
1
1
1
–3
–42
–
–3
0
Decrease in value of investment assets for which the life-assurance
policyholder bears the risk
Conditional bonus
Technical result, life assurance operations
Tax allocation reserve
Tax
NET PROFIT/LOSS FOR THE YEAR
Run-off result
–279
–92
–
–
0
–7,292
–62
1
–
0
–
142
–
–
–
53,035
6
0
–
–
139
1,056
–
78
–
53,174
1,062
–
78
–
7,703
–
–
–
–
20
433
–
–
–
11,632
958
19
70
2
Technical reserves, before ceded reinsurance
Life-assurance reserves
Provision for claims outstanding
Total
Provisions for life assurance for which the policyholder bears the risk
Conditional bonus
Reinsurers’ portion of technical reserves
Provision for claims outstanding
Collective consolidation fund
länsförsäkringar liv 2011 15
BALANCE SHEET
Group
ASSETS, SEK M
Note
Parent Company
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Intangible assets
Goodwill
14
–
1,162
–
–
Other intangible assets
15
12
24
–
–
Total intangible assets
12
1,186
–
–
5,867
5,628
1,480
1,442
Investment assets
Investment property/Land and buildings
16
Investments in Group companies and associated companies
Shares and participations in Group companies
17
–
–
765
5,785
Interest-bearing securities issued by Group companies and loans to Group companies
18
4,962
2,492
8,466
6,396
Shares and participations in associated companies
19
338
341
300
313
Other financial investment assets
Shares and participations
20
18,900
36,679
18,900
36,664
Bonds and other interest-bearing securities
21
79,291
56,954
79,291
56,921
Loans with collateral in real property
–
–
–
–
Other loans
0
0
0
0
Derivatives
22
4,563
2,874
4,563
2,874
–
904
–
904
Other financial investment assets
Deposits with companies that have ceded reinsurance
–
–
–
–
Total investment assets
113,920
105,872
113,765
111,300
Investment assets for which the life-assurance policyholder bears the risk
Assets for conditional bonus
23
4,003
174
4,003
174
Unit-linked insurance assets
24
–
54,032
–
–
597
663
597
656
Reinsurers’ portion of technical reserves
Provision for claims outstanding
Receivables
Other receivables
25
1,495
2,901
1,435
2,740
Total receivables
1,495
2,901
1,435
2,740
Other assets
Deferred tax assets
13
7
107
–
–
Cash and cash equivalents
7,279
7,336
7,279
7,322
Total other assets
7,286
7,443
7,279
7,322
Accrued interest and rental income
1,036
589
1,036
589
Deferred acquisition costs
26
564
1,491
564
615
Prepaid expenses and accrued income
Other prepaid expenses and accrued income
91
78
80
51
Total prepaid expenses and accrued income
1,691
2,158
1,680
1,254
TOTAL ASSETS
129,003
174,429
128,760
123,446
16 länsförsäkringar liv 2011
BALANCE SHEET
Group
EQUITY, PROVISIONS AND LIABILITIES, SEK M
Note
Dec. 31, 2011
Parent Company
Dec. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Equity
Share capital
27
Collective consolidation fund
8
8
8
8
23,868
25,853
25,995
27,642
Other reserves
Equity method reserve
38
28
–
–
Net profit/loss for the year
–13,063
3,716
–16,012
4,044
Total equity
10,851
29,605
9,991
31,694
Tax allocation reserve
–
–
507
407
81,700
Technical reserves before ceded reinsurance
Life-assurance reserve
28
104,572
81,700
104,572
Provision for claims outstanding
29
2,340
2,409
2,340
2,345
Total technical reserves
106,913
84,109
106,913
84,045
Conditional bonus
4,003
174
4,003
174
Unit-linked insurance liabilities
30
–
54,034
–
–
30
Provisions for life assurance for which the policyholder bears
the risk before ceded reinsurance
Provisions for other risks and expenses
Provisions for pensions and similar commitments
31
33
40
25
Deferred tax liabilities
13
146
122
–
–
Current tax liabilities
13
–
218
–
100
Total provisions for other risks and expenses
178
380
25
130
Deposits from reinsurers
597
663
597
656
Liabilities
Due to credit institutions
Derivatives
22
12
13
12
13
2,118
3,406
2,118
3,406
Other liabilities
32
3,615
1,508
3,947
2,454
Total liabilities
5,745
4,927
6,076
5,873
Accrued expenses and deferred income
Other accrued expenses and deferred income
716
537
648
467
TOTAL EQUITY, PROVISIONS AND LIABILITIES
129,003
174,429
128,760
123,446
MEMORANDUM ITEMS
33
For own liabilities, pledged assets
118,384
102,652
118,384
102,223
Other pledged assets
21
20
21
20
Contingent liabilities
0
0
0
0
3,250
5,486
3,250
5,486
Commitments
For information about the Group’s pledged assets and contingent liabilities, see Note 33.
länsförsäkringar liv 2011 17
STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
Group
SEK M
Opening equity, January 1, 2010
Parent Company
Share
capital
Collective
consolidation
fund
Equity
method
reserve
Retained
earnings incl.
net profit/loss
for the year
8
8,803
592
18,106
27,509
Total
Retained
earnings incl.
net profit/loss
for the year
Total
11,353
17,880
29,241
4,044
Collective
Share consolidation
fund
capital
8
Net profit/loss for the year
–
–
–
3,716
3,716
–
–
4,044
Other comprehensive income for the year
–
–29
–
–
–29
–
–
–
–
Comprehensive income for the year
–
–29
–
3,716
3,687
–
–
–
–
Appropriation of profit
–
18,106
–
–18,106
–
–
17,880
–17,880
–
Transfer, equity method reserve
–
564
–564
–
–
–
–
–
–
Disbursed bonus
–
–1,591
–
–
–1,591
–
–1,591
–
–1,591
Closing equity, December 31, 2010
8
25,853
28
3,716
29,605
8
27,642
4,044
31,694
Opening equity, January 1, 2011
8
25,853
28
3,716
29,605
8
27,642
4,044
31,694
Net profit/loss for the year
–
–
–
–13,063 –13,063
–
–
Other comprehensive income for the year
–
–
–
Comprehensive income for the year
–
–
–
–
Appropriation of profit
–
3,716
–
–3,716
Transfer, equity method reserve
–
–10
10
–
–16,012 –16,012
–
–
–
–13,063 –13,063
–
–
–
–
–
–
4,044
–4,044
–
–
–
–
–
–
–16,012 –16,012
Disbursed bonus
–
–1,669
–
–
–1,669
–
–1,669
–
–1,669
Transfer conditional bonus
–
–4,020
–
–
–4,020
–
–4,020
–
–4,020
Portfolio transfers
–
–2
–
–
–2
–
–2
–
–2
Closing equity, December 31, 2011
8
23,868
38
–13,063
10,851
8
25,995
–16,012
9,991
All equity is classified as restricted.
CASH-FLOW STATEMENT
Group
SEK M
Note
Net profit/loss before tax
Parent Company
2011
2010
2011
2010
–12,957
3,921
–15,428
4,702
–972
–872
–787
–622
–1,591
Income and yield tax paid
Disbursed bonus and pension collective agreements
from collective consolidation fund
–1,671
–1,645
–1,671
Adjustment for non-cash items
37
23,048
5,539
23,233
–81
7,448
6,943
5,347
2,408
Total
Change in other operating receivables and liabilities
Investment assets
–8,892
–1,077
–8,744
–1,014
Other assets
–5,113
–6,822
–74
–1,516
2,899
1,142
1,086
1,016
–3,659
186
–2,385
894
3,603
–
4,400
–
–
2,046
12
2,046
Liabilities
Cash flow from operating activities
Investing activities
Sale of subsidiary
Divestment of associated companies
Shareholders’ contributions
–
–
–
–400
Loans to Group and associated companies
–
–
–2,070
–146
Investments in intangible fixed assets
Cash flow from investing activities
Net cash flow for the period
–
151
–
–
3,603
2,197
2,342
1,500
–57
2,383
–43
2,394
Cash and cash equivalents, January 1
7,336
4,953
7,322
4,929
Cash and cash equivalents at end of period
7,279
7,336
7,279
7,322
–57
2,383
–43
2,394
Change in cash and cash equivalents
Cash and cash equivalents pertains to balances of bank accounts and Plusgiro, the amount is recognised in the balance sheet under Cash and bank balances.
18 länsförsäkringar liv 2011
Notes to the financial statements
Amounts are stated in SEK M unless specified otherwise
NOTE 1
ACCOUNTING POLICIES
Company information
This Annual Report was submitted on December 31, 2011 and pertains to Länsförsäkringar Liv Försäkringsaktiebolag (publ) which
is a non-profit-distributing limited liability insurance company
domiciled in Stockholm. The company’s address is Tegeludds­
vägen 21, SE-106 50 Stockholm, Sweden. The company’s Corporate Registration Number is 516401-6627.
In addition to life-assurance operations, the company’s business
activities comprise non-life insurance operations in the form of
group accident insurance. Since such group accident insurance
represents less than 1% of the total operations, and accordingly is
immaterial, the company’s entire operations have been recognised
as life assurance operations. The portion comprising non-life insur­
ance operations is recognised in the performance analysis under
“Cancellable group accident insurance.” Consequently, this class
of insurance has not been specified by occupational pension.
Compliance with standards and legislation
The consolidated financial statements have been prepared in
accord­ance with the International Financial Reporting Standards
(IFRS) as adopted by the EU, the Swedish Financial Reporting
Board’s recommendation RFR 1 Supplementary Accounting Rules
for Groups and the applicable parts of the Swedish Financial
Supervisory Authority’s FFFS 2008:26.
The Parent Company’s Annual Report was prepared in accord­
ance with the Annual Accounts Act for Insurance Companies
(ÅRFL), the regulations and general advice of the Financial Supervisory Authority concerning annual reports in insurance companies
(FFFS 2008:26, with the additions introduced in FFFS 2009:12 and
FFFS 2011: 28), and the Financial Reporting Board’s recommendation RFR 2. Länsförsäkringar Liv applies legally restricted IFRS.
These accounting policies comply with IFRS as far as possible
within the framework of Swedish law. This means that the Financial Supervisory Authority’s regulations refer to certain exceptions
to and limitations in International Financial Reporting Standards
(IFRS).
Conditions relating to the preparation of the Parent
Company’s and consolidated financial statements
The Parent Company’s functional currency is Swedish kronor
(SEK) and the financial statements are presented in SEK. All
amounts, unless otherwise stated, are rounded to the nearest million (SEK M). Assets and liabilities are recognised at cost, except
for most of the Group’s financial assets and liabilities that are measured at fair value or amortised cost.
The accounting policies stated below have been applied to all
periods presented in this Annual Report.
Company management’s judgments and estimates in the
financial statements
The preparation of accounts in accordance with IFRS requires that
management make judgments and estimates, and make assumptions that affect the application of the accounting policies and the
recognised amounts of income, expenses, assets and liabilities.
These judgments and estimates are based on historic experiences
and the best information available on the balance-sheet date. The
actual outcome may deviate from these judgments and estimates.
Estimates and assumptions are reviewed regularly.
Significant judgments utilised in the application of the Group’s
accounting policies are described below
Significant judgments in the application of accounting policies
were made in conjunction with the decision to recognise the financial component and the insurance component of all unit-linked
insurance contracts separately (known as unbundling) and in
­conjunction with deciding the classification of financial assets
and liabilities.
A new interpretation of the conditions of insurance contracts
for the Nya världen management form was made in 2011. The new
assessment is that the surplus is to be recognised as conditional
bonus instead of in the collective consolidation fund as previously.
This change was not applied retroactively in the accounts. The
change meant that the company’s technical reserves increased by
approximately SEK 4 billion in the fourth quarter of 2011. The
accounting policies below provide a more detailed definition of the
assessments made.
Significant sources of estimation uncertainty
The assumptions used in the calculation of the technical reserves
have the most significant effect on the amounts recognised in the
financial statements. In calculating the life-assurance reserve,
assumptions are made regarding the discount rate, mortality, morbidity and expenses. For further details, see the accounting policies
for liabilities and Note 2 Risks and risk management.
The valuation techniques described below in the accounting
policies for investment assets are used in the measurement of financial assets for which no observable market data is available. Measurement is based on the most recent information, which normal
involves quarterly measurement, one quarter in arrears. Special follow-ups are performed during periods of major turbulence in the
financial market.
For the valuation of investment property, cash-flow statements
containing several assumptions and judgements are used. They
include such parameters as rental and cost trends, inflation and the
discount rate. A change in any of these parameters due to a change
in vacancy rate, market conditions or similar events affects the calculated cash flows and thus the value of the properties. For further
details, see the accounting policies for investment assets.
Changed accounting policies, new IFRSs and interpretations
that have not yet been applied
A number of new or revised IFRSs will come into effect in future
fiscal years and were not applied in advance in the preparation of
these financial statements. The expected effects that the application
of these new or revised IFRSs may have on the company’s financial
statements are described below.
IFRS 9 Financial Instruments will replace IAS 39 Financial
Instruments: Recognition and Measurement by 2015 at the latest.
länsförsäkringar Liv 2011 19
The IASB has published the first of at least three parts of the project
that will jointly comprise IFRS 9. The first part addresses the classification and measurement of financial assets. Only two measurement categories will continue to exist: financial assets measured at
fair value or amortised cost. This change is not deemed to have any
material effect on Länsförsäkringar Liv.
In addition, the other new elements are not deemed to have any
material effect on Länsförsäkringar Liv’s earnings or financial
position.
Consolidated financial statements
The Group includes the Parent Company and the companies in
which Länsförsäkringar Liv directly or indirectly holds more than
half of the votes for all of the shares/participations. The consolidated financial statements were prepared following the purchase
method­in accordance with IFRS 3. Balance sheets of foreign subsidiaries were translated at the exchange rate on the balance-sheet
date. The income statements have been translated at the average
rate for the year. The translation difference that arises is recognised
in other comprehensive income and accumulated in equity.
Associated companies are companies in which ownership comprises a part of a permanent connection and in which the Parent
Company exercises influence over the management. In accounting
terms, joint ventures are companies in which the Group has a joint
controlling influence over the financial and operational management on the basis of partnership agreements with another party.
The share in associated companies’ and joint ventures’ earnings
after tax is recognised in the consolidated income statement. Associated companies and joint ventures are recognised in the consolidated financial statements in accordance with the equity method.
Intra-Group receivables and liabilities, income or expenses and
unrealised gains or losses arising from intra-Group transactions are
eliminated in their entirety.
as insurance contracts in the accounts. The company’s traditional
life assurance and the insurance component of the financial agreements are classified as insurance contracts. Premiums for insurance
contracts are recognised as premium income when payments are
made. Expenses are recognised when they arise, except for variable
costs that are capitalised, see Prepaid acquisition costs. Paid remuneration is recognised by the guaranteed portion being expensed
and the bonus portion reducing equity.
Financial agreements
Länsförsäkringar Liv believes that in its unit-linked insurance
oper­ations it has contracts with significant insurance risk and contracts with limited insurance risk. Insurance contracts that contain
limited insurance risk are classified as financial agreements. In the
reporting, these contracts are divided into a financial component
and an insurance component. This method is known as unbundling.
To provide more relevant information, the financial component and
the insurance component are recognised separately for all unitlinked insurance contracts.
Premiums for the financial component are recognised as a deposit in the insurance operations through the balance sheet. In the
same manner, claims payments for the financial component are
recognised as withdrawals from the insurance operations in the
balance sheet. The fees paid by customers are recognised as income
and the Group’s costs for insurance risk are recognised as expenses.
Contracts with discretionary participation features
Länsförsäkringar Liv has assessed that there are contracts with discretionary participation features in its traditional life assurance.
This means that the policyholders have a preliminarily distributable surplus. This preliminarily distributable surplus is not guaranteed. These contracts are recognised in accordance with the polices
applied for insurance contracts. The preliminarily distributable surplus is recognised as equity.
Shareholders’ and Group contributions
Shareholders’ contributions are recognised in the equity of the recipient and capitalised in shares and participations with the donor.
The Swedish Financial Reporting Board has withdrawn UFR 2
Group contributions and shareholders’ contributions and made
amendments to RFR 2 pertaining to recognition of Group contributions. As a result, Länsförsäkringar Liv has changed its accounting
policies for recognising Group contributions paid to and received
from its subsidiaries. As of 2011, Group contribution received will
be recognised as dividend and Group contribution paid as investment in shares in subsidiaries. No Group contributions were paid or
received in 2010 or 2011.
Translation of foreign currencies
Assets and liabilities in foreign currency have been translated
according to the exchange rates on the balance-sheet date, with the
exception of the equities in foreign subsidiaries and associated
companies, which are translated at the rate on the investment date.
Transactions in foreign currency are translated to the functional
currency at the exchange rate on the date of the transaction.
Income recognition
Insurance contracts
Premiums for insurance contracts are recognised as premium
income when payments are made.
Financial agreements
Payments attributable to the financial component of a financial
agreement are recognised as a deposit in the insurance operations
through the balance sheet. The fees customers pay for management
are recognised as income from financial agreements. The fees charged to customers for the management of financial agreements are
recognised in income in line with the company providing the man­
agement services to the policyholders. The provision of services is
evenly distributed over the term of the agreements.
Other technical revenue
Other income in the insurance operations is recognised under this item,
such as management remuneration, portfolio sales and other items.
Tax
Insurance contracts
In accordance with IFRS 4 Insurance Contracts, insurance contracts are to contain a certain amount of insurance risk to be treated
20 länsförsäkringar Liv 2011
Yield tax
Yield tax is not a tax on an insurance company’s earnings but it
paid by the company on behalf of the policyholders. Tax objects
comprise the value of the net assets managed on behalf of the policyholders. For the Group, the yield tax attributable to the period is
recognised in profit and loss as “Other non-technical expenses.”
For the Parent Company, yield tax is recognised as tax in profit and
loss. Fees charged for yield tax for financial agreements are
recognised in “Changes in technical reserves for life assurance for
which the policyholder bears the risk.”
Income tax
Income tax comprises current tax and deferred tax. Income tax is
recognised in the profit and loss, except when the underlying transaction is recognised directly against shareholders’ equity, whereby
the related tax effect is recognised in shareholders’ equity.
Current tax is tax that shall be paid or received in the current
year, with the application of the tax rates established or decided in
practice on the balance-sheet date. This also includes adjustments
of current tax attributable to prior periods.
Deferred tax is calculated in accordance with the balance-sheet
method, based on temporary differences between carrying amounts
and tax bases of assets and liabilities. Temporary differences are
not taken into account for initial recognition of goodwill or for initial recognition of assets and liabilities that are not business combinations and, at the time of the transaction, do not affect recognised
or taxable earnings. Nor are temporary differences attributable to
participations in subsidiaries and associated companies not expected to be reversed in the foreseeable future taken into consideration.
The valuation of deferred tax is based on how the carrying amounts
of assets and liabilities are expected to be realised or settled. Deferred tax is calculated with the application of the tax rates and tax
rules established or decided in practice on the balance-sheet date.
Deferred tax assets on deductible temporary differences and tax
loss carryforwards are only recognised to the extent that it is likely
that it will be possible to utilise these. The value of the deferred tax
assets is reduced when it is no longer considered likely that they
can be utilised.
Intangible assets
Goodwill
Goodwill is calculated as the portion of the cost for business combinations that exceeds the identifiable assets and liabilities of the
acquired entity. Goodwill is recognised as an asset and tested for
impairment every year. According to IFRS, goodwill is measured
at cost less any accumulated impairment in the Group. The Group
applied IFRS 1 to the goodwill in acquisitions that took place prior
to January 1, 2009, which means that IFRS was not applied retroactively and instead the carrying amount on January 1, 2009 continues to comprise the Group’s cost.
classification determines how the financial instrument is measured
after initial recognition.
1. Financial assets and liabilities measured at fair value with the
change in value in profit and loss. This category has two subcategories:
a) financial assets and liabilities that the company has initially
chosen to include in this category according to the Fair Value
Option. Länsförsäkringar Liv has decided to classify shares and
participations, bonds and interest-bearing securities, unit-linked
insurance assets and unit-linked insurance liabilities in this category. The company selected this classification since the financial
instruments are measured based on their fair value and this provides a better match to the technical reserves discounted by the
current market rate.
b) assets and liabilities that are held for trading, which are derivatives among both assets and liabilities.
2. Held-to-maturity investments, measured at amortised cost.
The company has no financial instruments in this category.
3. Loan receivables and accounts receivable, measured at amortised cost.
4. This category includes other receivables, loans, cash and bank
balances, accrued interest and rental income.
5. Available-for-sale financial assets, measured at fair value. The
company has no financial instruments in this category.
6. Financial liabilities measured at amortised cost Interest-bearing
and non-interest-bearing financial liabilities that are not deriva­
tives are included in this category.
Investment assets
Purchases and sales of investment assets are recognised in the
balance sheet on the trade date. Non-cash-settled transactions on
the balance-sheet date are recognised as receivables and liabilities
to counterparties under “Other receivables and liabilities.”
Realised gains and losses comprise the difference between cost
and the sales price. Realised gains and losses and recognised in
Investment income, revenue and expenses. Unrealised gains and
losses are the difference between cost and fair value. Previously
unrealised changes in value are reversed in conjunction with sales.
Unrealised gains and losses are recognised as unrealised gains and
losses in profit and loss.
Investment property/Land and buildings
The Group’s land and buildings were classified as investment property, meaning properties held to generate rental income and/or an
increase in value. The properties are measured at fair value individually by an external appraiser. The valuations were conducted by
using both district prices and the properties’ cash flows. Since valuation is based on fair value, property is not depreciated.
Development
In the consolidated financial statements, internal expenses for systems development were capitalised in the balance sheet. The useful
life is based on the nature of each system and the amortisation periods are three or five years from the date of completion. The value of
the assets is tested for impairment every year.
Financial instruments
Financial assets and liabilities are classified in different categories
based on the purpose for which the instrument was acquired. The
Financial assets:
Shares and participations
Shares are measured at fair value. The current buying-rate is applied to the valuation of financial investment assets and transaction
costs are expensed directly on the acquisition date.
Shares and participations in Group companies, associated
­companies and joint ventures are values at the lower of cost and
fair value.
länsförsäkringar Liv 2011 21
If an associated company is a partnership, the share of profit has
been added to the Parent Company’s earnings. Otherwise, the cost
method was applied in the Parent Company’s accounts.
Interest-bearing securities
Bonds and other interest-bearing securities are also measured at
fair value according to the most recently listed buying-rate. When
no such rate is available, a present value calculation is performed
with respect to the market interest rates of comparable securities on
the balance-sheet date. Capital gains/losses on bonds and other
interest-bearing securities are calculated as the difference between
sales value and amortised cost. In the calculation of amortised cost,
the difference between cost and exercise price are allocated in profit and loss over the remaining term. The change in amortised cost
is recognised net under “Interest income.”Unrealised changes comprise the difference between fair value and amortised cost.
Impairment
Financial instruments that are not measured at fair value are reviewed on each balance sheet-date to determine whether assets exist
whose recoverable amount is less than the carrying amount. If it is
deemed that the decrease in value is significant or protracted, an
impairment loss is recognised. Impairment losses are expensed in
profit and loss.
Deferred acquisition costs
Costs that have a clear connection to underwriting insurance and
signing financial agreements are capitalised as “Deferred acquisition costs” in the balance sheet. These acquisition costs pertain to
operating expenses, for example, commission and expenses for
sales that are directly related to acquisitions or renewals of financial agreements. The asset is impairment tested every year.
Allocations are made according to the same pattern as the recognition of income, meaning in line with the provision of services.
Derivatives
Loans that comprise investment assets are measured at fair value.
Leasing
Länsförsäkringar Liv leases equipment from its Parent Company
Länsförsäkringar AB. These agreements are limited in scope and
recognised in their entirety as operating leases.
Unit-linked insurance assets
Liabilities
Purchases and sales of init-linked insurance assets are recognised
in the balance sheet on the trade date, meaning the date on which
the substantial risks and rights are transferred between the parties.
Non-cash-settled transactions on the balance-sheet date are
recognised as receivables and liabilities to counterparties under
“Other receivables and liabilities.” Realised gains and losses comprise the difference between cost and the sales price. Unrealised
gains and losses are the difference between cost and fair value. Previously unrealised changes in value are reversed in conjunction
with sales. The unit-linked insurance asset has a direct link to the
value of the life-assurance reserve. The company does not have any
risk in the change in value of the value of the asset.
Technical reserves
All derivatives are measured at fair value in profit and loss.
Loans
Financial instruments not listed on an active market
If the market for a financial instrument is not active, the company
determines the fair value by using a valuation technique. The
­valuation techniques applied are based on market data as far as
­possible. Valuation techniques are used for derivative instruments
(OTC derivatives). The valuation techniques for OTC derivatives
comprise an analysis of discounted cash flows. The valuation
techniques applied are calibrated such that on initial recognition the
fair value amounts to the transaction price and changes in fair value
are subsequently recognised continuously based on changes that
occur in the underlying market-risk parameters.
Unlisted equities primarily comprise private equity funds, mean­
ing units in funds that purchase, develop and sell unlisted companies. Valuation data is obtained from the various funds and valuation complies with the guidelines of the European Private Equity
and Venture Capital Association. Measurement is based on the
most recent information from fund managers, which normal involves quarterly measurement, one quarter in arrears.
22 länsförsäkringar Liv 2011
Technical reserves comprise and life-assurance reserve and provision for claims outstanding.
Life-assurance reserve
The life-assurance reverse correspond to the anticipated capital
value of the company’s guaranteed commitments as per current
insurance contracts after deduction of the anticipated capital value
of future contractual premium payments. The life-assurance
reserve is calculated in accordance with standard actuarial principles based on assumptions regarding interest, mortality, morbidity
and expenses.
In the calculation of technical reserves, a gross interest assumption was applied in accordance with the Swedish Financial Supervisory Authority’s regulation FFFS 2011:22 for the choice of inter­
est rate in calculating technical reserves. The interest rate for covered bonds was used instead of the swap rate, in the cases in which
this is permitted by the regulation.
The entire yield curve was applied, meaning that each future
transaction is valued with respect to the interest rate the
correspond­ing to the duration of the transaction in relation to the
calculation date.
Assumptions regarding mortality are structured as generation
mortality and include a trend-based increase in life expectancy in
relation to year of birth. These assumptions are based on the
company’s experience of mortality in its own portfolio.
Provision for claims outstanding
The provision for claims outstanding comprises three different
balance-sheet items. These are provision for disability annuities,
established claims and non-established claims. The provision for
disability annuities corresponds to the capital value of the company’s
commitments in accordance with the insurance contract.
The provision for established claims is a provision for reported
and approved claims that have not yet been paid. It includes the
fixed-income operations. The provision for non-established claims
pertains to claims that have not yet been reported but which have
been made using statistical methods based on previous experience
for the respective products. For disability annuities at fixed
amounts, the nominal interest-rate assumption was determined
based on the yield curve used for life assurance provisions. Similarly, a real yield curve was applied to index-linked disability annuities. This now applies to all disability annuities regardless of
whether they are classed as occupational pensions.
Provisions for which the life-assurance policyholder bears the risk
This item comprises financial liabilities whereby the liability has a
direct link to the value of a financial asset for which the Group does
not have any risk in the change in value of the fair value of the
asset. The liabilities correspond to the redemption value of the fund
units held on behalf of the policyholders. Unit-linked insurance
contracts specified as an insurance component and deposit component (unbundling) recognise both components.
A conditional bonus is recognised as a bonus for which the
policy­holder bears a financial or insurance risk that affects the
amount of the bonus. The amount of conditional bonus is determined by the conditions of the insurance contracts. The provision is
measured at the value of the assets linked to the contracts. For the
conditional bonus for the Försäkrad pension and Nya världen products is recognised in profit and loss and the balance sheet. For Nya
värld­en, this is a new interpretation of the conditions of the insurance contracts from 2011. No retroactive application has been
made in the accounts.
Remuneration to employees
Current remuneration
Current remuneration to employees is calculated without discount
and recognised as an expense when the related services are
re­ceived. The anticipated cost of bonus payments and other variable remuneration is recognised when there is a legal or informal
duty to make such payments as a result of services received from
employees and the obligation can be reliably calculated.
Remuneration for termination of employment
An expense for remuneration in conjunction with the termination
of employment is recognised only if the company is demonstrably
obligated, without a realistic possibility of revocation, by a formal
detailed plan to terminate employment before the normal time.
When remuneration is provided as an offer to encourage voluntary
redundancy, an expense is recognised if it is probable that the offer
will be accepted and the number of employees who may accept the
offer can be reliably estimated.
Pension plans
The Group has both defined-contribution and defined-benefit pension plans, some of which have assets in separate foundations or
similar institutions. Current remuneration to employees is calculated without discount and recognised as an expense when the related
services are received. The anticipated cost of bonus payments and
other variable remuneration is recognised when there is a legal or
informal duty to make such payments as a result of services
re­ceived from employees and the obligation can be reliably calculated.
Defined-contribution pension plans
Plans whereby the company’s commitments are limited to the contributions that the company has undertaken to pay are classified as
defined-contribution pension plans. The Group’s payments of defined-contribution plans are recognised as expenses during the
period in which the employee performed the services to which the
contributions refer.
The pension agreement for the insurance industry, the FTP plan,
through insurance with the Insurance Industry’s Pension Fund (FPK)
and SPP Liv, is a multi-employer defined-benefit pension plan.
According to IAS 19, this pension plan entails that a company shall,
as a rule, report its proportional share of the defined-benefit pension commitment and the plan assets and expenses associated with
the pension commitment. FPK is currently unable to provide necessary information which is why the pension plans are recognised as
a defined-contribution plan in accordance with item 30 of IAS 19.
Defined-benefit pension plans
Group
The Group’s net commitments for defined-benefit plans are calculated separately for each plan by making an estimate of the future
remuneration that the employees will have earned over their
employment in both current and previous periods. This remuneration is discounted at a present value. The discount rate is the interest rate on the balance-sheet date of a high-quality commercial
paper with a term corresponding to that of the Group’s pension
commitments. When there is no longer an active market for such
commercial papers, the market interest rate on government bonds
with a corresponding term will be used instead. The calculation is
performed by applying the Projected Unit Credit Method. The fair
value of the plan assets is calculated as per the reporting date.
Actuarial gains and losses may arise in conjunction with the
determination of the present value and fair value of the plan assets.
These gains and losses arise either because the actual outcome
deviates from the earlier assumption or because the assumptions
are changed.
The corridor rule is applied to actuarial gains and losses arising
in conjunction with the calculation of the Group’s commitments for
various plans. The corridor rule entails that the portion of the accumulated actuarial gains and losses that exceeds 10% of the higher
of the commitments’ present value and the fair value of the plan
assets is recognised in earnings over the expected average remaining period of service for the employees encompassed by the plan.
In all other cases, no actuarial gains and losses are taken into
account.
The carrying amount of pensions and similar commitments
recognised in the balance sheet corresponds to the present value
of the commitments at year-end, less the fair value of plan assets,
unrecognised actuarial gains or losses and unrecognised expenses
for service during earlier periods.
When the calculation results in an asset for the Group, the carrying amount of the asset is limited to the net of the unrecognised
actuarial losses and unrecognised expenses for service during
länsförsäkringar Liv 2011 23
e­ arlier periods and the present value of future repayments from
the plan or reduced future deposits to the plan. When the remuneration amount of a plan is improved, the portion of the increase in
remuneration attributable to the employees’ service during earlier
periods is recognised in profit and loss straight-line over the average
period until the remuneration is earned in its entirety. An expense is
recognised directly in profit and loss if the remuneration has been
fully earned. When there is a difference between how the pension
cost is determined in the legal entity and in the Group, a provision
or receivable pertaining to a special employer’s contribution based
on this difference is recognised. The present value of the provision
and the receivable is not calculated. All expenses for defined-benefit pension plans are recognised as staff costs in operating profit.
Parent Company
The Parent Company applies different principles for the calculation
of defined-benefit plans to those stipulated in IAS 19. The Parent
Company complies with the provisions of the Pension Obligations
Vesting Act and the regulations of the Swedish Financial Supervi-
NOTE 2
sory Authority, which is a requirement for rights to tax deductions.
The most significant differences compared with the IAS 19 regulations are the determination of the discount rate, that the definedbenefit commitment is calculated based on current salary levels
without any assumptions concerning future salary increases, and
that all actuarial gains and losses are recognised in profit and loss
when they arise.
Cash-flow statement
The cash-flow statement was prepared in accordance with IAS 7.
The statement was recognised in accordance with the indirect method.
Contingent liabilities
A contingent liability is recognised when there is a possible commitment originating from events that have occurred and whose
occurrence is confirmed only by one or several uncertain future
events or when there is a commitment that is not recognised as a
liability or provision because it is probable that an outflow of
resources will be required.
RISKS AND RISK MANAGEMENT
The financial markets experienced extensive turmoil in 2011 and
interest-rate falls in Sweden were extreme. Long-term market interest rates declined to historically low levels at the end of 2011. In
parallel with the decline in Swedish long-term market interest
rates, the trend on the stock market was also negative.
Trends in the financial market led to Länsförsäkringar Liv
undertaking a series of steps to limit the negative consequences
caused by these trends. Länsförsäkringar Liv followed a predetermined action plan for such situations, which involved successive
sales of the liquid portions of the company’s equity portfolio and
increases to the duration of assets by purchasing long-term obligations and through derivative contracts.
Another step in reducing the effects of the financial crisis was
the discontinuation of underwriting new insurance policies under
traditional management on September 6, 2011. The subsidiary
Länsförsäkringar Fondliv was also sold to Länsförsäkringar AB on
October 31, 2011.
The systematic activities to govern, manage and control the
business operations’ risks were of immediate importance to the
company and its customers. All measures generated the expected
and positive effects on earnings and key figures. Despite these
efforts, key figures remain weak.
Focus and aims of risk management
Länsförsäkringar Liv conducts life assurance operations. The company offers various forms of pension savings and risk assurance.
The financial products and services that Länsförsäkringar Liv
offers involve risk-taking. Since Länsförsäkringar Liv is operated
in accordance with mutual principles, the company’s risks are
borne by the policyholders. The management of risk-taking shall
contribute to the provision of financial products at a controlled risk
level with a reasonable return.
24 länsförsäkringar Liv 2011
One of the key objectives is to ensure that Länsförsäkringar Liv
can meet its guaranteed commitments to customers with a satisfactory margin. Accordingly, the most critical risks are those that may
contribute to the company’s insolvency and the company not being
able to meet the commitments to its policyholders.
Risk management is an integrated part of the governance of the
operations, and aims at maintaining a satisfactory balance between
the level of risk and the conditions for generating returns.
Risk exposure
The following factors characterise Länsförsäkringar Liv’s risktaking:
• The operations are primarily targeted to private individuals,
employees and self employed persons working in small and
medium-sized businesses.
• All 23 regional insurance companies broker the company’s
prod­ucts, which thereby creates a geographic distribution
throughout Sweden.
• Market risks dominate the company’s risk profile. Among market risks, the credit risk (spread risk) is the largest risk due to the
holdings of Swedish covered mortgage bonds. Falling share
prices­also comprise a risk, despite shareholdings having
decreased during the year.
• One of the major life assurance risks is the risk that the average
life span of policyholders increases more than the assumptions
made which could lead to the technical reserves being insufficient to meet Länsförsäkringar Liv’s guaranteed commitments.
• Länsförsäkringar Liv has reinsured all of its risk of paying life
assurance and morbidity risks and taken out disaster reinsurance
to limit its risks.
Risk management organisation
The Board of Directors of Länsförsäkringar Liv is responsible for
ensuring appropriate risk management and follow-up of the
company’s risks. Following applicable regulations, the Board establishes the frameworks for the companies’ risk management and
risk control based on internal rules in various guidance documents.
The Presidents of the companies also decide on guidance documents in certain areas. Important guidance documents that regulate
risk management and risk control include Länsförsäkringar Liv’s
risk policy, insurance guidelines, risk assessment instructions,
instructions for reserve levels, reinsurance policy, solvency policy
and investment guidelines.
The Board of Directors of Länsförsäkringar Liv has appointed
three of the total of eight members in a Group-wide Committee for
the Länsförsäkringar AB Group. The Committee is intended to be a
forum for financial business environment and macroeconomic
analy­ses, and for preparing matters concerning asset management to
be presented to the Board for decision. It is also the duty of the
Finance Committee to monitor fulfilment of and compliance with
established objectives, investment orientation, chains of command,
etc.
There is an Investment Committee at management level in Länsförsäkringar Liv which is a preparatory body for the Finance Committee. The Investment Committee examines and prepares the
Asset Management Unit’s proposed investment orientations based
on established targets, financial environment analyses, macro­
economic analyses and specified frameworks. Representatives for
Länsförsäkringar Liv’s company management, the Asset Management Unit and the risk control function participate in the Committee.
Ongoing management and follow-ups of different risks are performed in the business operations. Each department at Länsförsäkringar Liv is responsible for identifying, measuring, monitoring,
handling and reporting risks in their specific areas. This also
ap­plies to outsourced operations. Risks in Länsförsäkringar Liv’s
investment assets (market risk, counterparty risk in financial derivatives and liquidity risk) are managed by the Group-wide unit of
Asset Management.
The Risk Control function, which is separate from the business
operations and reports to the Presidents and Boards, is responsible
for the independent risk control. The Risk Control function is also
responsible for keeping the Presidents and Boards continuously
informed of the companies’ overall risk situation. Furthermore, the
function carries out annual risk analyses in all departments and at
management level in Länsförsäkringar Liv. The compliance function
provides support for ensuring that the operations are in compliance
with regulatory requirements. The function identifies and reports
on risks that may arise as a result of non-compliance with regulatory requirements. The internal audit is an independent review
­function that comprises the Board’s support in quality assurance of
the organisation’s risk management, governance and controls.
Risk modelling
Länsförsäkringar Liv utilises a variety of analysis tools and simulation models in its risk management activities. A simulation model
is used in the ongoing investment operations to analyse investment
orientations under assumptions of future market scenarios. With
the framework of the preparations for Solvency II, work is underway on developing a partial internal model for measuring risk and
monitoring solvency capital requirements.
An analysis of the supporting data for the Financial Supervisory
Authority’s traffic-light model is used for ongoing risk monitoring.
The diagram below shows the specification of risk by main risk
type in Länsförsäkringar Liv as at December 31, 2011 in accordance with the traffic-light model. Diversification effects have been
distributed proportionally.
Risk profile for Länsförsäkringar Liv 2011 (2010)
Other insurance Interest-rate risk,
risks 5% (3%)
net 1% (27%)
Mortality risk
16% (7%)
Credit risk
39% (10%)
Equities risk
30% (47%)
Property risk
9% (6%)
The risk profile has changed markedly since year-end 2010 as a
result of the measures taken to manage the uncertain climate in the
financial market. Equities risk was reduced in the spring and summer by divesting equities and introducing equities hedging. In the
autumn, interest-rate risk net was sharply reduced by matching the
duration of the fixed-income portfolio with the duration of the
technical reserves. To reduce the sensitivity to fluctuations in European interest rates, European fixed-income investments were partly
replaced by Swedish ones in the autumn and the start of the winter.
Accordingly, credit risk increased.
Risk, capital and solvency
A key element of risk management takes place when deciding how
the company’s capital is to be managed. The preparations of proposals on investment orientations for Board decisions include an analysis of the impact on solvency, debt coverage and returns. Simulation models are used in this process. Absolute requirements for
risk-taking according to investment proposals are that the analysis
must show that the probability of falling below statutory solvency
and debt coverage ratio requirements is within the stipulated framework and that the Financial Supervisory Authority’s traffic-light
model does not indicate a red light.
Länsförsäkringar Liv’s solvency level and debt coverage ratio
exceed the statutory levels and the Financial Supervisory
Authority’s traffic-light model has given the company a green light.
Solvency II – risk-based regulatory requirements from 2014
The EU reached an agreement on the modernisation of regulatory
requirements for insurance companies, known as Solvency II, in
2009. These new rules place more rigorous demands on companies’
risk management. Also, the rules stipulate that the requirements for
minimum buffer capital placed on insurance companies will be significantly more closely linked to the size of the company’s risks.
The regulatory changes are extensive, affect a number of areas and,
in many respects, are manifested as substantially more detailed
länsförsäkringar Liv 2011 25
rules than the currently applicable provisions. The timeframe for
Solvency II has been postponed by the EU body. The most recent
proposals entail that the insurance companies must submit certain
information according to the Solvency II regulations during 2013,
but that the new material regulations are not expected to apply until
2014.
Länsförsäkringar Liv, along with the other companies in Länsförsäkringar AB, has participated in the Solvency II preparations
for several years. Following a preliminary study in 2008, a Solvency II preparation project has been ongoing since early 2009. An
increasing number of employees will be involved in the preparations. The work involves individual preparations and also influenc­
ing the content of the new rules. In 2011, a simplified process of
Own Risk and Solvency Assessment (ORSA) was implemented.
The purpose of the ORSA is to ensure that the company’s capital is,
and remains, adequate for bearing the risks attributable to implementation of the company’s strategic plan, business plan for the
coming 3–5 years.
Länsförsäkringar has a positive attitude to the modernisation of
the rules for the insurance sector under Solvency II. However, the
preparations for Solvency II demand extensive work and expenses
for Länsförsäkringar Liv. Measures need to be taken in terms of the
development of work processes and guidance documents and the
management of data inventories and calculation procedures.
The preparatory work for Solvency II is initially focusing on
ensuring compliance with the regulations. A parallel endeavour is
that the preparatory work will create the most possible business and
customer value. This can be achieved by utilising the opportunity
to improve the forms for governance, management and control of
risks and allocation of capital. The purpose is to both ensure the
efficiency of the work processes and to generate improved calculation tools for balancing risk limitation with opportunities for yield­
ing returns.
A standard formula or an internal model can be used to calculate
capital requirements under Solvency II. The latter is based on the
company’s own risks rather than applying more generally as is the
case under the standard formula. An internal model is to be
approved­by the Swedish Financial Supervisory Authority prior to
application. In January 2011, Länsförsäkringar Liv applied to the
Financial Supervisory Authority for a preparatory review of the
partial internal model for calculating the Solvency Capital Requirement. Work subsequently intensified to adapt the regulatory framework of the partial internal model and its connection to operational
planning, governance and control, which became central issues in
Länsförsäkringar Liv’s Solvency II efforts during the year. Länsförsäkringar Liv will thus be able to work with measures of capital
requirement that are better aligned with the company’s risks that
those in the standard formula.
Classification of risks
The following section describes Länsförsäkringar Liv’s overall
risks and their governance and management. The diagram below
shows the classification of risk that has been decided at the Länsförsäkringar AB Group and that is applied within Länsförsäkringar
Liv.
Life-assurance risk
Life assurance risks are the risks that arise in conjunction with
undertaking to insure the life and health of individual people. Life
assurance risks can be divided into a number of sub-groups.
Risk of paying life assurance, mortality risk,
risk of disability and morbidity
The risk of paying life assurance involves the average life span in
the portfolio increases more than was assumed, and the mortality
risks comprise the mortality of the insured parties being higher than
assumed level. The risk of disability and morbidity is the risk that
the disability and morbidity of the insured parties is greater than
was assumed.
Expenses risk
In addition to the purely insurance risks, there are such risks as
expense risk, which is the risk that the estimated costs will not
cover the company’s actual business costs. Länsförsäkringar Liv
continuously monitors the status of operating expense assumptions
in relation to actual costs at product level and at an overall level.
Cancellation risk
Cancellation risk is the risk that premium cancellations, repurchases or transfers are higher than expected. This risk impacts expen-
Classification of risk at Länsförsäkringar Liv
Quantifiable risks
Life-assurance risk
Market risk
Counterparty risk
Mortality risk
Interest-rate risk
Counterparty risk in ceded reinsurance
Risk of paying life assurance
Equities risk
Risk of disability and morbidity
Property risk
Counterparty risk in financial
derivatives
Expenses risk
Spread risk
Other counterparty risk
Cancellation risk
Currency risk
Disaster risk
Concentration risk in investment assets
Operational risk
Risks that are difficult to quantify
Business risk
26 länsförsäkringar Liv 2011
Concentration risk in investment
assets
Liquidity risk, including financing
risk
Other risks
ses risk since higher cancellations lead to lower income and accordingly fewer opportunities for covering the company’s actual
­operating expenses.
Disaster risk
Disaster risk is a generic term for the risk that natural disasters, epidemics or disasters caused by human activity lead to significantly
higher claims payments.
If the above risks are not limit they could lead to the technical
reserves being insufficient to meet Länsförsäkringar Liv’s guaranteed commitments The technical reserves correspond to the
company’s guaranteed commitments and are calculated per insur­
ance contract after assumptions are made for mortality, interest
rates, morbidity, the probability of recovery and operating expenses. These assumptions are made following regulations which are
intended to ensure that the company is always able to meet its
undertakings.
For occupational pensions, the assumptions are selected accord­
ing to the prudence principle, whereas for other products each of
the assumptions is to be satisfactory.
Life span in Sweden is gradually increasing, which means lower
requirements for provisions for insurance with a high mortality risk
(when insurance has been taken out against premature death). On
the other hand, this trend entails a great need for provisions for
those policyholders where the risk of paying life assurance is dominant.
Life assurance risks are limited by risk assessment regulations
applied by Länsförsäkringar Liv. Risk assessments mainly take into
account the costs of a potential insurance event and the age,
employment conditions, financial and health status of the insured.
Medical examinations may also take place in certain cases. Information provided in claims adjustment processes is regularly
checked.
Life assurance risks are also limited through reinsurance. Länsförsäkringar Liv has reinsured all of its risk of paying life assurance
and morbidity risks.
The table below shows the sensitivity to reasonably probable
changes in several key actuarial assumptions.
Change in
assumption, %
Assumption before reinsurance
Change in
provision, SEK M
2011
can be taken in management activities. The analysis studies the
life-assurance company’s liability to the policyholders and the
assets that it has. Risks and uncertainties are identified and consequences of various potential and more improbable events are tested
in a risk report that takes into account the probability of outcomes
for important key figures. The purpose is to produce an optimal risk
level with a high and competitive return. The proposed diversification is presented in a normal portfolio. The portfolio stipulates a
percentage for the distribution between equities and interest rates,
and other types of assets such as Private Equity (unlisted companies), alternative investments and properties.
A normal portfolio is defined to serve as the starting point for
distributing investments among asset classes and regions. Guide­
lines for decisions regarding the normal portfolio and short-term
investment decisions are produced. Analyses of the expected future
returns and the risk level for the asset classes that may be included
in the investment portfolios are performed continuously. Market
risks in asset management are controlled by decisions in Länsförsäkringar Liv’s Board concerning the normal portfolio and the
extent to which the actual portfolio may deviate from the normal
portfolio. In this way, the company’s Board takes a position on the
level of risk applying to investment operations and the degree of
freedom allowed to the operational management organisation in its
efforts to raise the return by deviating from the normal portfolio.
The portfolio is monitored daily to ensure that it is within the
de­sired and approved market risk levels. Changes in interest rates,
exchange rates, share prices and prices of commodities, as well as
changes in their individual volatilities, influence the market values
of financial assets and liabilities. Derivative instruments are
increas­ingly utilised in the management of investment assets in
order to enhance the efficiency of management and to achieve the
desired risk profile. The table below presents the sensitivity inherent in market risks.
Impact on
profit before tax
Sensitivity analysis
Interest-rate risk
2011
2010
1% lower interest rate
–248
–8,223
–2,268
–5,160
Equities risk1)
10% low share prices
Property risk
10% lower market value
–587
–563
Credit-spread risk
1% higher credit spread
–9,664
–3,744
Currency risk
10% weaker SEK
–31
–245
1) Includes 10% lower prices on hedge funds.
2010
Mortality
–20%/+20%
+2,900/–2,300 +2,000/–1,600
Morbidity
+50%
+200
+500
Expense ratio
+10%
+1,000
+1,200
Discount rate
–1.0%
+16,800
+15,000
Market risk
Market risk is the risk that the fair value of or future cash flows
from a financial instrument or a property will vary due to changes
in market prices. In the management of the Länsförsäkringar Liv’s
assets, assessments are made of the potential for a favourable return
and the risk level involved in the creation of investment strategies
and for investment decisions of a more operational nature. The
main asset classes in portfolio management are equities, interestbearing securities, alternative investments and property.
An ALM analysis is performed to ascertain the level of risk that
Interest-rate risk
For the insurance company, interest-rate risk is the predominant market risk. Interest-rate risk is also inherent in insurance liabilities by
policyholders being entitled to a guaranteed interest rate under many
life assurance contracts and by life-assurance reserves being discounted by the current market interest rate. Interest-rate risk is the risk that
the net value of assets, liabilities and insurance undertakings may
decline due to changed market interest rates. A fall in interest rates is
normally unfavourable for Länsförsäkringar Liv since the company’s
liabilities will then increase more than its assets. The desired interestrate risk is described and a desired target decided for the duration with
a rebalancing interval. Derivative instruments, such as interest-swap
contracts and swap options, are used to manage interest-rate risk.
Exposure to interest rate changes is presented in the table below as
fixed-interest periods for fixed-interest assets and liabilities, net.
länsförsäkringar Liv 2011 27
Fixed-interest periods for fixed-interest assets
less liabilities, net (including derivatives)
Dec. 31, 2011
Bonds and other interest-bearing
securities
Derivatives
Fixed-income assets less
fixed-income liabilities
Net exposure in foreign currency
Local currency in 000s
More
than
5–10
years 10 years
Currency
2010
2011
2010
–374,437
–1,129,710
–2,566
–7,595
–3,741
Less than
1 year
1–5
years
EUR
–199,236
–414,771
–1,773
1,372
24,768
9,006
26,726
61,871
GBP
–131,430
–76,965
–1,400
–810
–
–3,061
10,394
19,249
26,582
CNY
685,476
1,758,594
747
1,794
1,372
21,707
19,400
45,975
88,453
475
1,203
Total
USD
KRW
79,781,365 203,156,207
Other currencies
Total
Dec. 31, 2010
Bonds and other interest-bearing
securities
Derivatives
Fixed-income assets less
fixed-income liabilities
Equivalent in SEK M
2011
More
than
5–10
years 10 years
Less than
1 year
1–5
years
1,794
21,030
5,385
–
–9,366
–4,302
1,794
11,664
1,083
3,435
Total
31,644
–2,247 –15,916
1,188
15,728
Equities risk
Equities risk is the risk that the value of assets may decline due to
falling share prices. The risk is described and decided on a normal
portfolio with exposure by region. In certain, selected regions,
investments are subsequently made with a number of asset managers to reduce the manager risk in individual regions. For the
regions/markets that are not invested in by active asset managers,
investments are made in the desired market index.
4,207
6,704
–310
–2,445
Counterparty risk
Counterparty risk pertains to the risk that counterparties are unable
to fulfil their undertaking and that any collateral provided does not
cover the receivable. Länsförsäkringar Liv’s exposure to counterparty risk primarily arises through the use of financial derivatives.
Counterparty risks in financial derivatives are managed through
regulations for approved exposure to counterparties.
The size of the permitted exposure depends on the rating of the
counterparty. Exposure is limited on the basis of ISDA agreements
(netting agreements) and accompanying agreements on pledging
collateral for certain attained counterparty exposure.
Counterparty risks in financial derivatives per rating category
Calculated based on the market value of the derivative
2011
2010
AA
186,441
523,090
Property risk
A
442,145
532,408
Property risk is the risk that the value of assets declines due to
­falling property prices. The property prices are an effect of the
assumptions made on applicable yield requirements and rental
levels.
The maximum credit risk exposure without consideration of credit
enhancement corresponds to the carrying amount of the assets on
the balance-sheet date.
Operational risk
Credit-spread risk
Credit-spread risk is the risk that the value of assets declines due to
increases in the difference between market interest rates on bonds
with credit risks and government securities. The counterparty shall
have a credit rating that is deemed to be sufficient. Decisions on the
size of the portion of the bond portfolio that is to comprise bonds
with credit risk are made in light of prevailing market conditions.
Bond investments classified by rating
AAA – Swedish Government
AAA – Government securities other than those issued
by the Swedish Government
AAA – other
AA
2011
2010
5,629
3,612
4,514
690
36,372
22,939
3,294
2,595
A
10,365
7,630
BBB or lower
18,059
16,315
Currency risk
Currency risk is the risk that the net value of assets, liabilities and
insurance undertakings declines due to fluctuations in exchange
rates. Decisions on the size of currency exposure are made in light
of prevailing market conditions. The total net currency exposure on
December 31, 2011 amounted to negative 0.3% (neg: 2.4) of total
investment assets.
28 länsförsäkringar Liv 2011
Operational risk is the risk of losses arising due to inappropriate or
unsuccessful processes, human error, incorrect systems or external
events.
Operational risk analyses are performed annually both at company level and in the operating activities. A joint method and
reporting format are used in these analyses. Operational risks are
identified, the consequences evaluated and probability assessed.
Action plans are prepared for material risks, which are followed up
every quarter. The Risk Control function facilitates analyses and
aggregates results to each company’s management group and
Board. Risk Control also monitors and reports the implementation
of the action plans during the year.
To meet the increasing requirements in incident handling, common system support is used with the aim of standardising operating-risk measurement methods throughout the Group. Furthermore,
a continuity plan is adopted annually by executive management.
Business risk
Business risk is the risk of losses occurring as a result of business
strategies and business decisions proving to be misdirected, actions
by competitors, changes in the external environment, negative
rumours about the company and an unexpected downturn in
income, for example, from volume decreases.
Business risk is managed at Board and management level
through analyses and decisions prior to making strategic choices on
operational focus, in the annual business planning process and if
required by trends in the Group’s markets. The specific business
risks that are deemed to be the most important at any time are con­
tinuously monitored at management level.
Note 3
PREMIUM INCOME
Group
SEK M
2010
2011
2010
6,404
6,453
6,386
6,431
150
151
150
151
0
120
0
120
6,554
6,724
6,536
6,702
Premiums for individual life assurance
1,721
2,025
1,706
2,007
Group insurance premiums
4,683
4,428
4,680
4,424
Total
6,404
6,453
6,386
6,431
Periodic premiums
4,661
5,592
4,643
5,570
Single premiums
1,743
861
1,743
861
Total
6,404
6,453
6,386
6,431
793
875
793
875
5,593
5,556
5,593
5,556
Gross premium income before ceded
reinsurance is distributed as follows in
the life-assurance operations
Concentration risk
Direct life assurance
Concentration risk defined as the risk of losses occurring as a result
of investment assets not being highly diversified, of undertakings
vis-à-vis policyholders not being highly diversified or as a result of
other forms of risk concentration. Concentration risk is primarily
counterbalanced by decisions determining the maximum exposure
per counterparty in financial derivatives, the diversification of
investment assets, limits for exposure per reinsurer and discretionary reinsurance of the insured for very large individual risks.
The largest counterparties on December 31, 2011 were Nordea,
including Nordea Hypotek, SEB and Swedbank Hypotek.
Direct medical and accident insurance
In investment assets
Concentration risk is deemed to be small for the company in relation to market risks based on the diversification provided in the
company’s investment orientations. Having as a general rule that
these investments can be used for debt coverage also means that the
risk of excessively high individual commitments is kept low. See
also Note 20 Shares and participations and Note 21 Bonds and
other interest-bearing securities.
Assumed reinsurance
Total
Gross premium income for direct
life assurance is distributed in the
following categories
Premiums for contracts that do not
carry bonus rights
Premiums for contracts that carry
bonus rights
Premiums for which the policyholder
bears the risk
Total
Länsförsäkringar Liv primarily targets private individuals, employees and self employed persons working in small and medium-sized
businesses. All 23 regional insurance companies broker the company’s
products, which thereby creates a geographic distribution through­
out Sweden. Accordingly, Länsförsäkringar Liv’s insurance risks
are highly diversified. Länsförsäkringar Liv has taken out disaster
reinsurance to further limit its risks. The insurance policy has been
taken out so that the provisions regarding maximum retention in
the insurance guidelines can be met by a healthy margin.
18
22
–
–
6,404
6,453
6,386
6,431
All premiums pertain to insurance in Sweden.
Note 4
In insurance operations
Parent Company
2011
INVESTMENT INCOME, REVENUE
Group
SEK M
Rental income
Dividends received outside the Group
Dividends received from Group companies
Dividends received from associated
companies
Total dividends
Parent Company
2011
2010
2011
2010
442
434
100
103
5,089
2,797
4,351
1,881
–
–
22
43
18
67
18
67
5,107
2,864
4,391
1,991
2,201
1,389
2,186
1,385
123
92
228
128
Interest income
Bonds and other interest-bearing securities
Interest income from Group companies
Liquidity risk, including financing risk
Other interest income
1,448
455
1,443
454
Liquidity risk is the risk that the company’s undertakings cannot be
fulfilled due to a shortage of cash and cash equivalents. This entails
that the undertakings cannot be fulfilled without borrowing or disposing of a financial instrument for a considerable added value.
Liquidity risk is minimised by the predominant proportion of
investments being made in securities with high liquidity that are
listed on well-established exchanges. To further limit liquidity
risks, the management agreements describe how investments are to
be made in unlisted assets. Sometimes investments are made consciously in less liquid and unlisted assets to achieve a higher return.
The table below presents the discounted net cash outflows for
technical reserves by year.
Total interest income
3,772
1,936
3,857
1,967
17
–
–
–
–
–
27
22
328
443
328
416
Reversed impairment
Land and buildings
Shares and participations
Exchange-rate gains, net
Capital gains, net
Land and buildings
0
0
0
0
Shares and participations
2,647
25
0
491
Bonds and other interest-bearing securities
3,186
1
3,186
1
111
–
101
–
5,944
26
3,287
492
15,610
5,703
11,991
4,992
Other investment assets
Total capital gains
Investment income, revenue
Percentage of cash flow, %
Duration, year
2011
2010
0–5
22.3
14.3
5–10
18.9
15.8
10–15
16.3
16.0
15–20
14.2
16.0
20–30
18.1
24.0
30–
10.1
13.9
länsförsäkringar Liv 2011 29
Note 5
Total expenses comprise the following
UNREALISED GAINS ON INVESTMENT ASSETS
Group
SEK M
Land and buildings
Interest-bearing securities issued by and
loans to Group companies
Bonds and other interest-bearing securities
Shares and participations
Derivatives
Parent Company
2011
2010
2011
2010
103
45
27
35
17
–
17
–
653
93
653
93
–
1,618
–
1,618
2,784
–
2,784
–
Other
–
136
–
136
Total
3,557
1,892
3,481
1,882
Note 6
Group
2011
2010
2011
2010
Acquisition
–957
–1,115
–567
–658
–10
–10
–9
–8
Administration
–505
–225
–350
–103
Financial management
–121
–80
–121
–80
–28
–33
–3
–3
–1,621
–1,463
–1,050
–852
Claims adjustment
Property management
Total
Costs for acquisition and administration are recognised in profit and loss under operating
expenses, the costs for claims adjustment are recognised under claims payments in Note 7,
costs for financial management are recognised in Note 11 under asset management expenses,
and costs for property management are recognised as direct costs for properties in Note 16.
OTHER TECHNICAL REVENUE
Group
Group
SEK M
Risk income
Parent Company
SEK M
Parent Company
SEK M
Total costs are distributed as follows
2011
2010
2011
2010
Parent Company
2011
2010
2011
2010
–114
–120
–114
–120
–11
–12
–11
–12
–329
–397
–199
–223
20
389
–
–
Staff costs, etc.
327
–
–
–
Costs for premises, etc.
Other
5
–
–
–
Amortisation/depreciation, etc.
Total
352
389
–
–
Other
–1,167
–934
–726
–497
Total
–1,621
–1,463
–1,050
–852
Management remuneration
Note 7
CLAIMS PAYMENTS BEFORE CEDED REINSURANCE
Group
SEK M
Parent Company
2011
2010
2011
2010
Claims payment
–4,054
–3,903
–4,040
–3,888
Cancellations and repurchases
–1,423
–817
–1,423
–817
Claims adjustment costs
Total
Note 8
Dec. 31,
2010
Audit assignment
2
2
2
2
Audit operations in addition
to the audit assignment
4
0
4
0
Tax advice
0
0
0
0
Parent Company
Other assignments
1
–
1
–
2011
Total
7
2
7
2
–10
–9
–8
–4,730
–5,472
–4,713
2010
2010
Operating expenses in life assurance
operations distributed according to
functions
Acquisition
Change in the “Prepaid acquisition costs”
item
Administrative expenses
Commission and profit shares in ceded
reinsurance
–927
–1,105
–516
–614
–30
–10
–51
–44
–786
–501
–630
–368
281
266
280
265
–1,462
–1,350
–917
–761
Of which, purchases from the
Länsförsäkringar AB Group
–482
–463
–482
–463
Total amount of direct insurance provisions
–805
–878
–414
–422
Total amount of research and development
expenses that have been expensed
–194
–150
–142
–110
Total
The item “Acquisition” consists of “Acquisition” and “Changes in the ‘Prepaid acquisition
costs’ item” below. The item “Administration” consists of the total of the items “Administration expenses” and “Commission and profit shares in ceded reinsurance.”
30 länsförsäkringar Liv 2011
Parent Company
Dec. 31,
2011
–10
2011
Group
Dec. 31,
2010
OPERATING EXPENSES
SEK M
AUDIT EXPENSES
Dec. 31,
2011
–5,487
Group
Note 9
SEK M
KPMG AB
Audit assignments pertain to a review of the Annual Report and accounts, and the management by the Board of Directors and President, other work assigned to the company’s auditors,
and advice or other assistance required due to observations made during the review or implementation of such assignments. Everything else comes under Other assignments.
Note 10
EMPLOYEES, STAFF COSTS AND REMUNERATION
TO SENIOR EXECUTIVES
Group and Parent Company
Average number of employees
2011
2010
Sweden
Men
34
35
Women
71
78
105
113
Total number of employees
Remuneration to the Board of Directors
Directors’ fees are payable to the Chairman and members of the Board in accordance with a
decision of the Annual General Meeting. No fee is payable to employee representatives.
Salaries, other remuneration and social
security expenses, SEK M
Salaries and remuneration
of which variable remuneration
Variable remuneration
Variable remuneration may be paid to all employees who are not managers. A basic prerequisite for paying variable remuneration to employees is that the Länsförsäkringar AB Group
reports positive results before appropriations and tax. One third of the remuneration is based
on exceeding the joint goals in Länsförsäkringar AB’s business plan and two thirds on the
degree to which the individual goals in the goal contract were achieved. A maximum of SEK
12,000 may be paid to employees per year if all the prerequisites are fulfilled.
51
53
1
0
Social security expenses
34
40
of which pension costs
15
19
Total
85
93
Remuneration of senior executives
Remuneration to the President and other senior executives comprises basic salary, variable
salary and other benefits. Pension benefits and other benefits paid to the President and other
senior executives are included as part of total remuneration. Senior executives are the individuals who, together with the President, comprise company management.
Board of Directors and senior executives, 16 (21)
11
10
of which salaries to President
Salaries and remuneration
3
3
of which variable remuneration to President
–
–
of which fixed salary to other senior executives
6
5
of which variable remuneration to other senior executives
–
–
Social security expenses
8
7
of which pension costs
Total
4
4
20
18
62
64
Total salaries, remuneration and social
security expenses, SEK M
Salaries and remuneration
of which variable remuneration
Social security expenses
of which pension costs
Total
1
0
43
47
19
22
105
111
länsförsäkringar Liv 2011 31
Note 10
EMPLOYEES, STAFF COSTS AND REMUNERATION TO SENIOR EXECUTIVES, cont.
Pension costs as a percentage
of pensionable salary, %
Remuneration and other benefits for senior executives
Parent Company 2011, SEK 000s
Jörgen Svensson, President
Basic salary/
Board fee
Variable
remuneration
Other
remuneration
Pension
costs
Total
Definedcontribution
Definedbenefit
3,401
0
0
1,568
4,969
45
–
Karl-Olof Hammarkvist, Chairman of the Board
257
–
–
–
257
–
–
Gunnar Wetterberg, Deputy Chairman of the Board
196
–
–
–
196
–
–
Sten Lundqvist, Board member
196
–
–
–
196
–
–
Ulrika Messing, Board member
196
–
–
–
196
–
–
Gunvor Engström, Board member
171
–
–
–
171
–
–
Anders Östryd, Board member
143
–
–
–
143
–
–
Karin Åkesson, Board member
173
–
–
–
173
–
–
Lennart Atteryd, Board member
197
–
–
–
197
–
–
Christina Ramberg, former Deputy Chairman
of the Board
89
–
–
–
89
–
–
Peter Lindvall, former Board member
43
–
–
–
43
–
–
5,957
0
196
2,271
8,424
33
–
11,019
0
196
3,839
15,054
Other senior executives (5 people)
Total
Pension costs as a percentage
of pensionable salary, %
Remuneration and other benefits for senior executives
Parent Company 2010, SEK 000s
Jörgen Svensson, President
Basic salary/
Board fee
Variable
remuneration
Other
remuneration
Pension
costs
Total
Definedcontribution
Definedbenefit
3,032
0
0
1,451
4,483
45
–
Karl-Olof Hammarkvist, Chairman of the Board
238
–
–
–
238
–
–
Christina Ramberg, Deputy Chairman of the Board
231
–
–
–
231
–
–
Sten Lundqvist, Board member
188
–
–
–
188
–
–
Ulrika Messing, Board member
188
–
–
–
188
–
–
Gunvor Engström, Board member
188
–
–
–
188
–
–
Gunnar Wetterberg, Board member
188
–
–
–
188
–
–
Anders Östryd, Board member
188
–
–
–
188
–
–
Karin Åkesson, Board member
189
–
–
–
189
–
–
Peter Lindvall, Board member
188
–
–
–
188
–
–
Lennart Atteryd, Board member
100
–
–
–
100
–
–
91
–
–
–
91
–
–
5,419
0
2
2,100
7,521
28
–
10,428
0
2
3,551
13,981
Christer Höij, former Board member
Other senior executives (6 people)
Total
Pensions
The retirement age for the President is 60. The pension between the age of 60 and 65 is a
defined-contribution plan. The pension premium shall amount to 31% of pensionable salary.
Pensionable salary refers to fixed salary. In addition, the company pays an additional pension
premium of SEK 120,000 per year. Pension from the age of 65 will be subject to the terms
of the pension agreements between the Swedish Insurance Employers’ Association (FAO),
the Swedish Union of Insurance Employees (FTF) and the Swedish Confederation of Professional Associations (SACO). The retirement age for other senior executives is 65. The pension is subject to the terms of the pension agreements between the Swedish Insurance
Employers’ Association (FAO), the Swedish Union of Insurance Employees (FTF) and the
Swedish Confederation of Professional Associations (SACO).
Severance pay
A mutual period of notice of six months applies to the President. If termination of employment is issued by the company, severance pay corresponding to 18 months’ salary will be
paid, in addition to the period of notice. For other senior executives, the period of notice follows applicable agreements between the Swedish Insurance Employers’ Association (FAO),
the Swedish Union of Insurance Employees (FTF) and the Swedish Confederation of Professional Associations (SACO).
Composition of Remuneration Committee
The Board of Directors shall appoint at least two members from within its ranks to form a
Remuneration Committee. The Board Chairman may serve as the Chairman of the Committee. The other members must be independent in relation to the company and company management.
Policies for remuneration to senior executives
Senior executives in the Länsförsäkringar AB Group shall have market-based employment
terms and conditions. The total remuneration must be on par with the industry. The structure
and level of remuneration should correspond to the company’s values, meaning that it should
be reasonable, moderate and well-balanced, and also contribute to good ethics and organisational culture, characterised by openness and transparency.
Fixed remuneration is paid according to the general policy above. Pensions should comply
with the terms of the pension agreements between the Swedish Insurance Employers’ Association (FAO), the Swedish Union of Insurance Employees (FTF) and the Swedish Confederation
of Professional Associations (SACO).
In addition to the above benefits, a company car is offered in accordance with applicable
conditions, individual medical insurance and other benefits offered to all employees.
Number of women among senior executives, %
Preparation and decision-making process applied in relation to the issue
of remuneration to company management
A Remuneration Policy for the Länsförsäkringar AB Group regulates the preparation and decision-making process for remuneration to company management.
The Remuneration Committee prepares important remuneration decisions and decisions on
measures for following up the application of the Remuneration Policy.
Decisions regarding remuneration and other terms and conditions of employment for the
President are made by the Board of Directors.
32 länsförsäkringar Liv 2011
Group
Parent Company
Dec. 31,
2011
Dec. 31,
2010
Dec. 31,
2011
Dec. 31,
2010
Board members
6
33
36
38
Other senior executives
9
56
50
56
Percentage women
Note 11
INVESTMENT INCOME, EXPENSES
Note 12
Group
SEK M
2011
2010
2011
2010
Operating expenses, land and buildings
–162
–177
–25
–25
Asset management expenses
–96
UNREALISED LOSSES ON INVESTMENT ASSETS
Parent Company
–80
–96
–80
Interest expense
Group
SEK M
2010
2011
Land and buildings
–
–
–
–
Bonds and other interest-bearing securities
–
–196
–
–152
–6,010
–
–6,010
–
–169
–184
–169
–184
–6,179
–380
–6,179
–336
Shares and participations
Derivatives
Bonds and other interest-bearing securities
–66
–88
–66
–60
–1
–1
–1
–1
Other interest expense
–299
–246
–299
–278
Total interest expense
–366
–335
–366
–339
–73
–95
–
–15
–
–
–
–
–73
–95
–
–15
–174
–20
–174
–23
–
Property loans
Parent Company
2011
Total
2010
Impairment
Other investment assets
Shares and participations
Total impairment
Exchange-rate losses, net
Capital losses, net
Land and buildings
–
–
–
–1,046
–176
–1,046
–
–2
–1,552
–1
–1,616
Total capital losses
–1,048
–1,728
–1,047
–1,616
Investment income, expenses
–1,919
–2,435
–1,708
–2,098
Shares and participations
Bonds and other interest-bearing securities
Note 13
TAXES
Group
SEK M
2011
Parent Company
2010
2011
2010
Current tax
Yield tax on pension funds
–
–
–490
–528
–100
–142
–91
–133
118
3
–3
3
Deferred tax pertaining to temporary differences
–124
–65
–
–
Total recognised tax expense
–106
–204
–584
–658
Tax
Adjustment of tax pertaining to prior years
Deferred tax
Deferred tax liabilities pertaining to the following:
13
14
–
–
Untaxed reserves
Investment property/Land and buildings
133
107
–
–
Total
146
122
–
–
Deferred tax assets pertain to the following:
Investment property/Land and buildings
7
8
–
–
Loss carryforwards
–
99
–
–
Total
7
107
–
–
The change between the years pertaining to recognised deferred tax liabilities and tax assets
has been recognised as deferred tax expenses/income in profit and loss.
Yield tax is recognised in the Group according to IFRS in the item “Other non-technical expenses.”
Tax rates applied:
Yield tax on pension funds, pension insurance
15%
15%
15%
15%
Yield tax on pension funds, endowment insurance
27%
27%
27%
27%
Average government borrowing rate for taxation
2.76%
3.1%
2.76%
3.1%
Tax rate for calculating income tax
26.3%
26.3%
26.3%
26.3%
Tax rate for calculating deferred tax
26.3%
26.3%
26.3%
26.3%
länsförsäkringar Liv 2011 33
Note 14
GOODWILL
Group
SEK M
Cost
Accumulated amortisation
Accumulated impairment
Divestments
Closing balance
Opening balance
Depreciation for the year
Divestments
Closing balance
Note 15
Parent Company
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
1,162
2,650
–
Dec. 31, 2010
–
–
–1,473
–
–
–
–15
–
–
–1,162
–
–
–
–
1,162
–
–
1,162
1,162
–
–
–
–
–
–
–1,162
–
–
–
–
1,162
–
–
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
225
225
–
–
–
–
–
–
OTHER INTANGIBLE ASSETS
Group
SEK M
Parent Company
Dec. 31, 2010
Cost
Opening balance
Additional assets for the year
Scrapped
Closing balance
–
–
–
–
225
225
–
–
–116
–106
–
–
–12
–10
–
–
Accumulated amortisation
Opening balance
Depreciation for the year
Scrapped
–
–
–
–
–128
–116
–
–
–85
–85
–
–
–
–
–
–
Closing balance
–85
–85
–
–
Carrying amount
12
24
–
–
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
169
157
–
–
–
12
–
–
Closing balance
Accumulated impairment
Opening balance
Impairment for the year
a) Software
Group
Cost
Opening balance
Reclassification
Scrapped
Closing balance
Parent Company
Dec. 31, 2010
–
–
–
–
169
169
–
–
–116
–106
–
–
–12
–10
–
–
Accumulated amortisation
Opening balance
Depreciation for the year
Scrapped
–
–
–
–
–128
–116
–
–
–29
–29
–
–
–
–
–
–
Closing balance
–29
–29
–
–
Carrying amount
12
24
–
–
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
Opening balance
0
12
–
–
Investments in the form of internal development
–
–
–
–
Reclassification
–
–12
–
–
Impairment
–
–
–
–
Closing balance
Accumulated impairment
Opening balance
Impairment for the year
b) Intangible assets under development
Group
Parent Company
Dec. 31, 2010
Closing balance
–
–
–
–
Carrying amount
0
0
–
–
12
23
–
–
Total carrying amount
34 länsförsäkringar Liv 2011
Note 16
INVESTMENT PROPERTY/LAND AND BUILDINGS
Holdings
Cost
Fair
value
Floor space
vacancy rate
Direct
yield
Change
in value1)
Change in
value1)
Investment property, value on December 31, 2011
5,408
5,867
15.9%
5.0%
–1,383
–23.8%
Investment property, value on December 31, 2010
5,215
5,628
10.7%
4.8%
–1,340
–23.8%
Cost
Fair
value
Floor space
vacancy rate
Direct
yield
Change
in value1)
Change in
value1)
Group, SEK M
Parent Company, SEK M
Land and buildings, value on December 31, 2011
1,061
1,480
7.8%
5.4%
–376
–25.4%
Land and buildings, value on December 31, 2010
1,050
1,442
7.8%
5.8%
–361
–25.1%
1) Change in value refers to the change in market value if the direct yield requirement is raised by two percentage points. No part of the property is used for the company’s own operations.
Change in value for the period
Cost
Group, SEK M
Fair value
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
5,215
5,108
5,628
5,612
–
–
–
–
192
152
192
152
Sales
–
–45
–
–
Profit/loss from adjustments of fair value
–
–
47
–236
Opening balance
Acquisitions
Additional investments in existing assets
Exchange-rate differences
–
–
–
100
5,408
5,215
5,867
5,628
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
1,050
1,047
1,442
1,404
11
3
11
3
–
–
27
35
1,061
1,050
1,480
1,442
Closing balance
Cost
Parent Company, SEK M
Opening balance
Additional investments in existing assets
Other receivables
Closing balance
Fair value
Summary of values for the Group
SEK M
Tax assessment value
Fair value
Cost
928
1,480
1,061
Subsidiaries
1,910
4,387
4,347
Total for the Group
2,838
5,867
5,408
Parent Company
Similar to prior years, the Group’s properties were valued externally by independent valuation companies. The valuations were conducted by using both location prices and the properties’ cash
flows. Due to the exceptional economic climate prevailing during the year, the financial markets or market for property transactions did not function normally, resulting in few transactions and
location prices not being available to a normal extent, instead, greater emphasis has been attached to the cash-flow method.
Impact on profit for the period
SEK M
Group
Parent Company
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
429
434
100
103
–148
–177
–23
–25
Rental income
Direct expenses for properties that generated rental income during the period
(operating and maintenance expenses, real estate tax and site leasehold fees)
The income-statement items above are included in the lines Investment income, revenue and Investment income, expenses.
länsförsäkringar Liv 2011 35
Note 17
SHARES AND PARTICIPATIONS IN GROUP COMPANIES
Number
of shares/
participations
Share
of equity, %
Equity
2011
Profit
2011
Carrying
amount
Stockholm
100
100
56
5
85
Stockholm
1,000
100
0
0
0
969680-4195
Stockholm
1,000
100
154
9
232
Company name
Corporate
Registration
Number
Registered
office
HWH Katsan KB1)
969671-2042
Länsförsäkringar Komplement AB
556660-1257
Fastighets KB Automobilpalatset
KB Plutonia1)
969645-2060
Stockholm
100
100
16
15
1
KB Hålstenen 21)
916618-1330
Stockholm
100
100
21
15
194
KB Cirkusängen
969715-5902
Stockholm
0
99.9
–2
–2
–1
Fastighets AB Sprängaren 8
556678-4012
Stockholm
1,000
100
8
2
63
Fastigheten Dykarhuset AB
556678-4004
Stockholm
1,000
100
17
5
58
Fastighets AB Apelsinen 5
556678-4038
Stockholm
1,000
100
5
5
83
Fastighets AB Storsundet
556740-2390
Stockholm
1,000
100
40
14
50
Fastighets AB Solnaaprikosen 31)
556657-8265
Stockholm
–
100
–
–
–
Fastighets AB Solnasmultronet 21)
556657-8299
Stockholm
–
100
–
–
–
Fastighets AB Cirkusstenen1)
556612-1306
Stockholm
–
100
–
–
–
Total December 31, 2011
315
67
765
Total December 31, 2010
1,348
175
5,785
1) Indirectly owned subsidiaries.
All shares and participations are unlisted.
Parent Company
Cost, SEK M
Opening balance
Added and deducted assets
Closing balance
Dec. 31, 2011
Dec. 31, 2010
6,018
5,773
–5,495
245
523
6,018
–233
–198
Accumulated impairment
Opening balance
Reversed impairment from prior years
475
–35
Closing balance
242
–233
Total carrying amount
765
5,785
1,044
7,721
Fair value
Note 18
INTEREST-BEARING SECURITIES ISSUED BY GROUP COMPANIES AND LOANS TO GROUP COMPANIES
Group
SEK M
Listed bonds issued by Länsförsäkringar Hypotek
Listed bonds issued by Länsförsäkringar Bank
Promissory notes from Swedish Group companies
Fixed-term subordinated debentures to Swedish Group companies (Länsförsäkringar Bank)
Parent Company
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
2,815
2,492
2,815
2,492
558
–
558
–
–
–
3,504
3,904
492
–
492
–
Loans to Group companies (Länsförsäkringar AB Group)
1,097
–
1,097
–
Total fair value
4,962
2,492
8,466
6,396
6,061
Cost
Opening balance
2,448
2,314
6,352
Purchases, sales and transfers for the year
2,203
134
2,053
291
Cost
4,650
2,448
8,405
6,352
Accumulated impairment
Opening balance
–
–
–
–155
Impairment for the year
–
–
–
155
Accumulated impairment
–
–
–
0
4,650
2,448
8,405
6,352
Total cost
36 länsförsäkringar Liv 2011
Note 19
SHARES AND PARTICIPATIONS IN ASSOCIATED COMPANIES
Group’s
carrying
amount
Parent
Company’s
carrying
amount
Registered
office
Number
of shares/
participations
Share of
equity, %
556678-4715
Stockholm
499
49.9
0
0
0
0
916511-5057
Stockholm
499
49.9
75
36
338
300
Total December 31, 2011
75
36
338
300
Total December 31, 2010
88
31
341
313
Company name
Corporate
Registration
Number
Kista Qvadrat KB
Skalholt KB
Equity
2011
Profit
2011
All shares and participations are unlisted.
Total amount for associated companies
Income
Earnings
Assets
Liabilities
Equity
Fair value
Group and Parent Company, December 31, 2011
32
36
77
2
75
338
Group and Parent Company, December 31, 2010
31
31
97
10
88
341
Group
Cost, SEK M
Opening balance
Added and deducted assets
Closing balance
Note 20
Parent Company
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
341
2,499
313
Dec. 31, 2010
1,907
–3
–2,158
–13
–1,594
338
341
300
313
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
6,044
18,873
6,044
18,858
12,856
17,806
12,856
17,806
SHARES AND PARTICIPATIONS
Group
SEK M
Listed shares and participations
Unlisted shares and participations
Parent Company
Dec. 31, 2010
Total
18,900
36,679
18,900
36,664
Cost
12,791
28,673
12,791
28,658
Dec. 31, 2010
Dec. 31, 2011
Note 21
BONDS AND OTHER INTEREST-BEARING SECURITIES
Group
SEK M
Dec. 31, 2011
Parent Company
Dec. 31, 2010
Issued by
Swedish government
5,629
3,612
5,629
3,612
28,971
15,761
28,971
15,761
Other Swedish issuers
3,340
5,594
3,340
5,561
Foreign states
4,514
690
4,514
690
Other foreign issuers
36,837
31,297
36,837
31,297
Total
79,291
56,954
79,291
56,921
Amortised cost
76,118
55,987
76,118
55,955
78,692
56,387
78,692
56,354
599
567
599
567
79,291
56,954
79,291
56,921
Swedish mortgage institutions
Market status
Securities listed
Securities unlisted
Total
The carrying amounts of the securities compared with their par amounts
Carrying amount
79,291
56,954
79,291
56,921
Nominal amounts
–75,852
–55,619
–75,852
–55,586
Total
3,439
1,335
3,439
1,335
Total surplus
3,788
1,446
3,788
1,446
Total deficit
–349
–111
–349
–111
3,439
1,335
3,439
1,335
Total
länsförsäkringar liv 2011 37
Note 22
DERIVATIVES
Group and Parent Company
Fair values
SEK M
Dec. 31, 2011
Nominal amounts
Dec. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Derivative instruments with positive values or valued at zero
Equity
503
–
6
1
1,103
94
74,186
11,174
Interest
1,545
1,956
–
129,163
Other
1,412
824
66,395
141,376
140,587
281,714
Currency
Total
4,563
2,874
Cost
3,372
1,821
Derivatives with negative values
Equity
Currency
Interest
Other
218
2
5
0
1,255
1
74,232
5,580
25
939
26,588
128,102
620
2,464
66,401
143,876
167,226
277,558
Total
2,118
3,406
Cost
1,244
1,101
Note 23
ASSETS FOR CONDITIONAL BONUS
Group
SEK M
Parent Company
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
174
119
174
119
4,020
–
4,020
–
–191
56
–191
56
4,003
174
4,003
174
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
Equity funds
–
49,132
–
–
Fixed-income funds
–
4,900
–
–
Opening balance
Transfer conditional bonus
Change in value according to the income statement
Closing balance
Note 24
UNIT-LINKED INSURANCE ASSETS
Group
SEK M
Parent Company
Dec. 31, 2010
Total
–
54,032
–
–
Cost
–
50,371
–
–
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
154
76
154
76
Other receivables
1,341
2,825
1,281
2,664
Total
1,495
2,901
1,435
2,740
Dec. 31, 2010
Dec. 31, 2011
Note 25
OTHER RECEIVABLES
Group
SEK M
Receivables from the Länsförsäkringar Group
Note 26
Parent Company
Dec. 31, 2010
Deferred ACQUISITION COSTS
Group
SEK M
Dec. 31, 2011
Parent Company
Dec. 31, 2010
Insurance contracts
Opening balance
615
659
615
659
Capitalised costs during the year
148
179
148
179
–199
–223
–199
–223
564
615
564
615
Depreciation according to plan for the year
Closing balance
Financial agreements
Opening balance
876
842
–
–
Capitalised costs during the year
151
208
–
–
Depreciation according to plan for the year
–130
–174
–
–
Divestments
–897
–
–
–
–
876
–
–
564
1,491
564
615
Closing balance
Total closing balance
38 länsförsäkringar liv 2011
Note 27
SHARE CAPITAL
Parent Company
Dec. 31, 2011
Dec. 31, 2010
Number of shares, issued and paid
8,000
8,000
Quotient value per share, SEK
1,000
1,000
Number of shares outstanding
8,000
8,000
According to applicable Articles of Association, the company is unable to pay any dividend. The changes in equity, compared with the preceding year’s balance sheet, are recognised in the
statement of changes in equity.
Note 28
life-assurance reserves
Group
SEK M
Parent Company
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
81,700
80,988
81,700
80,988
Payments
5,572
5,530
5,572
5,530
Dividends
–5,009
–4,137
–5,009
–4,137
–933
Opening balance
Costs withdrawn
Investment income contributed to life-assurance reserves
Changes in reserves due to amended interest-rate assumptions
Mortality results
Yield tax
Other changes
Closing balance
Note 29
–924
–933
–924
1,474
661
1,474
661
25,112
2,474
25,112
2,474
–58
–12
–58
–12
–369
–372
–369
–372
–2,926
–2,499
–3,367
–2,499
104,572
81,700
104,572
81,700
PROVISION FOR CLAIMS OUTSTANDING
Established
claims
Non-established
claims
Provision for
claims and
disability
annuities
72
110
2,227
2,409
2,832
–
–
–
–
–131
–11
–2
–46
–59
–
Other changes
–9
144
–145
–10
–292
Closing balance
52
252
2,036
2,340
2,409
60
108
2,177
2,345
2,752
–
–
–
–
–131
Other changes
–8
144
–141
–5
–276
Closing balance
52
252
2,036
2,340
2,345
Group
SEK M
Opening balance
Transferred portfolio
Divestments
Total
Dec. 31, 2011
Total
Dec. 31, 2010
Parent Company
SEK M
Opening balance
Transferred portfolio
Note 30
UNIT-LINKED INSURANCE liabilities
SEK M
Group
Parent Company
Dec. 31, 2011
Dec. 31, 2010
54,034
45,952
–
–
5,381
6,345
–
–
Cancellations and repurchases
–550
–594
–
–
Dividends
–766
–847
–
–
Costs withdrawn
–352
–401
–
–
Change in value
–5,748
3,789
–
–
–235
–225
–
–
14
15
–
–
–51,778
–
–
–
–
54,034
–
–
Opening balance
Payments
Yield tax
Other changes
Divestments
Closing balance
Dec. 31, 2011 Dec. 31, 2010
länsförsäkringar liv 2011 39
Note 31
PENSIONS
Group
Provision for pensions being paid
Provisions for early retirement in accordance with pension agreement
Dec. 31, 2011
Dec. 31, 2010
24
28
9
12
33
40
Defined-benefit pension plans
The Group has a number of defined-benefit pension plans. The largest of these plans is a pension agreement from 2006 for the insurance sector whereby persons born in 1955 or earlier are
entitled to voluntarily retire from the age of 62. The terms and conditions of this plan are designed such that the pension comprises approximately 65% of the pensionable salary at age 62.
The provision is calculated on an actuarial basis according to the insurance guidelines and basis for calculation applied for individually issued life assurance. The calculations are based on a
summary of the ages and annual pensions calculated as an average per age group. A probability assessment has determined that 20% will utilise the option for early retirement.
In addition to this plan, there are a number of minor plans that almost only encompass employees who have already reached retirement age. These plans cover old-age pensions and in some
cases also survivor’s pension. The pension amounts are paid in relation to the final salary level when the employee retires and in the vast majority of cases are life annuities.
In the event that enumeration of the pension has been agreed, the Group follows the norms applied by the Insurance Industry’s Pension Fund.
Dec. 31, 2011
Present value of wholly or partly funded commitments
Fair value of plan assets
Dec. 31, 2010
1
1
–1
–1
Present value of unfunded commitments
28
28
Present value of net commitments
27
28
Unrecognised accumulated actuarial gains (+) and losses (–)
–1
4
Net amount recognised pertaining to defined-benefit plans in the balance sheet
27
32
6
8
33
40
33
40
32
45
Provision, special employer’s contribution
The net amount is recognised in the following items in the balance sheet:
Other provisions
Change in net liability reported in the balance sheet:
Opening liability, January 1
Pension costs for the year according to specification below
3
–6
Settlement
–9
–7
Closing net debt, December 31 according to the balance sheet
27
32
29
31
Changes in total present value for defined-benefit plans
Commitments for defined-benefit plans, January 1
Interest expense
1
0
Reduction of the commitment due to settlement
–1
–1
Paid remuneration
–4
–4
Actuarial gains (–) and losses (+)
Total commitments for defined-benefit plans, December 31
3
2
29
29
Change in the value of plan assets
Fair value of plan assets, January 1
1
1
Fair value of plan assets, December 31
1
1
Composition of plan assets
Cash and bank balances
1
1
Total
1
1
Costs recognised in profit and loss
Interest expense
1
0
Effects of reductions and settlements
4
2
Amortisation of actuarial gains/loss
–1
–9
Total net expenses in profit and loss
3
–6
3
–6
Costs are recognised in the following lines in profit and loss:
Staff costs
Significant calculation assumptions on December 31
Discount rate
1.1%
2.7%
Expected return on plan assets
3.0%
3.0%
Expected rate of salary increase
Percentage expected to retire voluntarily at age 62
Historic information
3.0%
3.0%
20.0%
20.0%
2011
2010
Present value of defined-benefit commitments
29
29
Fair value of plan assets
–1
–1
Surplus/Deficit in the plan
27
28
Experience-based adjustment pertaining to defined-benefit commitments
–3
–2
40 länsförsäkringar liv 2011
Defined-contribution pension plans
These pension plans are plans according to which the company pays fixed contributions to a separate legal entity and does not have a legal or informal obligation to pay additional contributions.
The Group’s payments of defined-contribution plans are recognised as expenses during the period in which the employee performed the services to which the contributions refer.
Primarily, contributions to the Insurance Industry’s Pension Fund (FPK) are recognised here. This plan encompasses all employees except for a few individuals who have individual solutions.
The pension agreement for the insurance industry, the FTP plan, through insurance with the Insurance Industry’s Pension Fund (FPK) is a multi-employer defined-benefit pension plan.
According to IAS 19, this pension plan entails that a company shall, as a rule, recognise its proportional share of the defined-benefit pension commitment and the plan assets and expenses
associated with the pension commitment. Disclosure shall also be presented in the accounts according to the requirements for defined-benefit pension plans.
At present, the FPK is unable to provide the necessary information, which is why the above-mentioned pension plans are recognised as defined-contribution plan according to item 30, IAS
19. There is also no information about future surplus or deficit in the plan and whether these would impact future contributions.
Expenses for defined-contribution plans
SEK M 2011
2010
Expenses for defined-contribution plans
13
13
Parent Company
Defined-benefit pension plans
Länsförsäkringar Liv has a number of defined-benefit pension plans. The largest of these plans is a pension agreement from 2006 for the insurance sector whereby persons born in 1955
or earlier are entitled to voluntarily retire from the age of 62. The terms and conditions of this plan are designed such that the pension comprises approximately 65% of the pensionable salary
at age 62.
In addition to this plan, there are a number of minor plans that almost only encompass employees who have already reached retirement age. These plans cover old-age pensions and in some
cases also survivor’s pension.
The pension amounts are paid in relation to the final salary level when the employee retires and in the vast majority of cases are life annuities.
In the event that enumeration of the pension has been agreed, the Group follows the norms applied by the Insurance Industry’s Pension Fund (FPK).
SEK M Dec. 31, 2011
Dec. 31, 2010
Pension commitments
Other provisions
Provisions for pensions
6
7
21
25
Total
27
32
Of the pension commitments, only the following amount is encompassed by the Pension Obligations Vesting Act
20
24
Opening capital value on January 1 in accordance with Swedish principles for calculation of pension commitments
30
32
Cost excluding interest expense charged to earnings
–2
3
1
0
The year’s change in capital value of own obligations for which there are no separated assets:
Interest expense
Pensions paid
–4
–5
Capital value at December 31
25
30
The year’s change in capital value of own commitments which are wholly or partly covered by separated assets:
Opening capital value on January 1 in accordance with Swedish principles for calculation of pension commitments
2
2
Cost excluding interest expense charged to earnings
0
0
Interest expense
0
0
Pensions paid
0
0
Capital value at December 31
2
2
Opening capital value on January 1 in accordance with Swedish principles for calculation of pension commitments
32
34
Cost excluding interest expense charged to earnings
–2
3
1
1
The year’s change in the total capital value of the company’s own commitments:
Interest expense
Pensions paid
–4
–5
Capital value at December 31
27
32
Fair value of separated assets
Fair value on January 1
1
2
Return on separated assets
0
0
–1
Payments to and from pension foundations
0
Surplus in separated assets
0
0
(Fair value of separated assets to the extent that the value does not affect the company’s accounts)
0
0
1
1
Amount recognised under contingent liabilities
Fair value on December 31
–1
–1
Net pension commitments on December 31
26
31
Costs regarding pensions:
The company’s own pensions
Cost excluding interest expense
Interest expense
3
3
–1
1
2
4
Return on separated assets
Cost of the company’s own pensions
0
Costs covered by surplus in separated assets
0
0
Recognised net cost attributable to pensions
2
4
Fair value of separated assets:
Equity instrument
0
0
Other assets
2
2
–1
–1
1
1
Liabilities
Total
länsförsäkringar liv 2011 41
Note 31
PENSIONS, cont.
SEK M Dec. 31, 2011
Dec. 31, 2010
1.8–2.3%
1.8–2.3%
Assumptions pertaining to defined-benefit commitments:
Discount rate
Expected return on plan assets
3.0%
3.0%
Expected rate of salary increase
3.0%
3.0%
20.0%
20.0%
Percentage expected to retire voluntarily at age 62
Defined-contribution pension plans
These pension plans are plans according to which the company pays fixed contributions to a separate legal entity and does not have a legal or informal obligation to pay additional contributions.
The Group’s payments of defined-contribution plans are recognised as expenses during the period in which the employee performed the services to which the contributions refer.
Primarily, contributions to the Insurance Industry’s Pension Fund (FPK) are recognised here. This plan encompasses all employees except for a few individuals who have individual solutions.
The pension agreement for the insurance industry, the FTP plan, through insurance with the Insurance Industry’s Pension Fund (FPK) is a multi-employer defined-benefit pension plan.
According to IAS 19, this pension plan entails that a company shall, as a rule, recognise its proportional share of the defined-benefit pension commitment and the plan assets and expenses
associated with the pension commitment. Disclosure shall also be presented in the accounts according to the requirements for defined-benefit pension plans.
At present, the FPK is unable to provide the necessary information, which is why the above-mentioned pension plans are recognised as defined-contribution plan according to item 30, IAS
19. There is also no information about future surplus or deficit in the plan and whether these would impact future contributions.
Expenses for defined-contribution plans
SEK M Expenses for defined-contribution plans
Note 32
2011
2010
13
13
OTHER LIABILITIES
Group
SEK M
Parent Company
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
–
–
394
1,136
116
63
116
63
Other liabilities
3,499
1,445
3,437
1,255
Total
3,615
1,508
3,947
2,454
Dec. 31, 2010
Dec. 31, 2011
Liabilities to Group companies
Liabilities to Länsförsäkringar AB Group
Note 33
MEMORANDUM ITEMS
Group
Dec. 31, 2011
Parent Company
Dec. 31, 2010
For own liabilities, pledged assets
Carrying amount for financial assets provided as collateral for technical reserves:
Bonds
92,268
66,415
92,268
65,986
Shares and participations
19,391
25,845
19,391
25,845
Property-related assets
5,217
4,893
5,217
4,893
Other assets
1,508
5,499
1,508
5,499
118,384
102,652
118,384
102,223
118,384
102,652
118,384
102,223
14
14,
14,
14
7
6,
7
6
21
20
21
20
Total
The total above consists of registered assets in accordance with Chapter 6,
Section 30 of the Swedish Insurance Business Act.
The technical liabilities which correspond to registered assets amount to
Other pledged assets
Other party’s lien for own properties
Other pledged assets
Total
In the event of insolvency, the policyholders have a priority right to the registered assets. During the course of the operations, the company has the right to add and withdraw assets from the
register as long as all insurance undertakings are covered for liabilities in accordance with the Insurance Business Act.
Group
Dec. 31, 2011
Parent Company
Dec. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Contingent liabilities
Contingent liabilities in associated companies
Early retirement at age 62 in accordance with pension agreement, 80%
Pension commitment exceeding the wealth of the pension foundation
Total
–
–
–
–
21
27
21
27
0
1
0
1
21
28
21
28
3,250
5,486
3,250
5,486
Commitments
Remaining amount to invest in investment assets
42 länsförsäkringar liv 2011
Note 34
ASSETS AND LIABILITIES PER MEASUREMENT CATEGORY
Financial assets measured at
fair value in profit and loss
Group Dec. 31, 2011
Loan receivables
and accounts
receivable
Financial assets
measured according
to fair value option
Held for
trading
Other intangible assets
–
–
–
12
12
Investment property
–
–
–
5,867
5,867
Assets
Non-financial
assets
Total
Fair value
(financial assets)
Interest-bearing securities issued by Group companies
–
4,962
–
–
4,962
Shares and participations in associated companies
–
–
–
338
338
Shares and participations
–
18,900
–
–
18,900
18,900
Bonds and other interest-bearing securities
–
79,291
–
–
79,291
79,291
Derivatives
–
–
4,563
–
4,563
4,563
Investment assets for which the policyholder bears the
risk
–
3,985
18
–
4,003
4,003
Reinsurers’ portion of technical reserves
–
–
–
597
597
Other receivables
1,217
79
–
206
1,502
1,296
Cash and bank equivalents
7,279
–
–
–
7,279
7,279
1
1,036
–
654
1,691
1,037
8,497
108,253
4,581
7,674
129,003
Prepaid expenses and accrued income
Total assets
4,962
Financial liabilities measured
at fair value in profit and loss
Fair value
(financial
liabilities)
Other financial
liabilities
Financial liabilities
valued according
to fair value option
Held for
trading
Non-financial
liabilities
Total
Technical reserves
–
–
–
106,913
106,913
Provisions for life assurance for which the policyholder
bears the risk
–
–
–
4,003
4,003
Other provisions
–
–
–
178
178
Deposits from reinsurers
–
–
–
597
597
Due to credit institutions
12
–
–
–
12
12
–
–
2,118
–
2,118
2,118
3,027
–
–
588
3,615
3,027
173
–
–
543
716
173
3,212
–
2,118
112,822
118,152
Liabilities
Derivatives
Other liabilities
Accrued income and prepaid expenses
Total liabilities
Financial assets measured at
fair value in profit and loss
Group Dec. 31, 2010
Assets
Loan receivables
and accounts
receivable
Financial assets
measured according
to fair value option
Held for
trading
Non-financial
assets
Total
1,162
Goodwill
–
–
–
1,162
Other intangible assets
–
–
–
24
24
Investment property
–
–
–
5,628
5,628
Interest-bearing securities issued by Group companies
–
2,492
–
–
2,492
Shares and participations in associated companies
–
–
–
341
341
Fair value
(financial assets)
2,492
Shares and participations
–
36,679
–
–
36,679
36,679
Bonds and other interest-bearing securities
–
56,954
–
–
56,954
56,954
Loans with collateral in fixed property
–
–
–
–
–
Other loans
–
–
–
–
–
Derivatives
–
–
2,874
–
2,874
2,874
Other financial investment assets
–
904
–
–
904
904
Deposits with companies that have ceded reinsurance
–
–
–
–
Investment assets for which the policyholder bears the risk
–
54,206
–
–
54,206
54,206
Reinsurers’ portion of technical reserves
–
–
–
663
663
Other receivables
Cash and bank equivalents
Prepaid expenses and accrued income
Total assets
838
6
–
2,164
3,008
7,336
–
–
–
7,336
–
651
–
1,507
2,158
8,174
151,892
2,874
11,489
174,429
7,336
länsförsäkringar liv 2011 43
Note 34
ASSETS AND LIABILITIES PER MEASUREMENT CATEGORY, cont.
Financial liabilities measured
at fair value in profit and loss
Other financial
liabilities
Financial liabilities
valued according
to fair value option
Held for
trading
Non-financial
liabilities
Total
–
–
–
84,109
84,109
Provisions for life assurance for which the policyholder bears
the risk
–
54,206
–
–
54,206
Other provisions
–
–
–
380
380
663
Liabilities
Technical reserves
Fair value
(financial
liabilities)
54,206
Deposits from reinsurers
–
–
–
663
Due to credit institutions
13
–
–
–
13
13
–
–
3,406
–
3,406
3,406
Derivatives
Other liabilities
Accrued income and prepaid expenses
Total liabilities
1,007
–
–
501
1,508
1,007
168
–
–
368
537
168
1,189
54,206
3,406
86,021
144,822
Financial assets measured
at fair value in profit and loss
Parent Company,Dec. 31, 2011
Loan receivables
and accounts
receivable
Financial assets
measured according
to fair value option
Held for
trading
Nonfinancial assets
Total
Land and buildings
–
–
–
1,480
1,480
Shares and participations in Group companies
–
765
765
Assets
–
–
Interest-bearing securities issued by Group companies
and loans to Group companies
–
8,466
–
–
8,466
Shares and participations in associated companies
–
–
–
300
300
Fair value
(financial
assets)
8,466
Shares and participations
–
18,900
–
–
18,900
18,900
Bonds and other interest-bearing securities
–
79,291
–
–
79,291
79,921
4,563
4,563
–
4,003
4,003
Derivatives
–
–
4,563
Investment assets for which the policyholder bears the risk
–
3,985
18
–
–
–
597
597
Other receivables
Reinsurers’ portion of technical reserves
1,217
–
–
139
1,435
1,223
Cash and bank equivalents
7,279
–
–
–
7,279
7,279
1,115
Prepaid expenses and accrued income
Total assets
1
1,115
–
565
1,681
8,497
111,757
4,581
3,925
128,760
Financial liabilities measured
at fair value in profit and loss
Liabilities
Technical reserves
Other financial
liabilities
Financial liabilities
valued according
to fair value option
Held for
trading
Non-financial
liabilities
Total
–
–
–
106,913
106,913
4,003
Fair value
(financial
liabilities)
Provisions for life assurance for which the policyholder
bears the risk
–
–
4,003
Other provisions
–
–
–
25
25
Deposits from reinsurers
–
–
–
597
597
Due to credit institutions
12
–
–
–
12
12
–
–
2,118
–
2,118
2,118
Derivatives
Other liabilities
Accrued income and prepaid expenses
Total liabilities
44 länsförsäkringar liv 2011
3,027
–
–
919
3,946
3,027
173
–
–
475
648
173
3,212
–
2,118
112,932
118,262
Note 34
ASSETS AND LIABILITIES PER MEASUREMENT CATEGORY, cont.
Financial assets measured
at fair value in profit and loss
Parent Company,Dec. 31, 2010
Loan receivables
and accounts
receivable
Financial assets
measured according
to fair value option
Held for
trading
Nonfinancial assets
Total
Land and buildings
–
–
–
1,442
1,442
Shares and participations in Group companies
–
5,785
5,785
Assets
–
–
Interest-bearing securities issued by Group companies and
loans to Group companies
–
6,396
–
–
6,396
Shares and participations in associated companies
–
–
–
313
313
Fair value
(financial
assets)
6,396
Shares and participations
–
36,664
–
–
36,664
36,664
Bonds and other interest-bearing securities
–
56,921
–
–
56,921
56,921
2,874
Derivatives
–
–
2,874
–
2,874
Other financial investment assets
–
904
–
–
904
904
Investment assets for which the policyholder bears the risk
–
174
–
–
174
174
Reinsurers’ portion of technical reserves
–
–
–
656
656
–
6
–
2,734
2,740
6
7,322
–
–
–
7,322
7,322
651
Other receivables
Cash and bank equivalents
Prepaid expenses and accrued income
Total assets
1
651
–
602
1,254
7,323
101,716
2,874
11,532
123,445
Financial liabilities measured
at fair value in profit and loss
Liabilities
Technical reserves
Other financial
liabilities
Financial liabilities
valued according
to fair value option
Held for
trading
Non-financial
liabilities
Total
–
–
–
84,045
84,045
Provisions for life assurance for which the policyholder
bears the risk
–
–
–
174
174
Other provisions
–
–
–
130
130
656
Fair value
(financial
liabilities)
Deposits from reinsurers
–
–
–
656
Due to credit institutions
13
–
–
–
13
13
–
–
3,406
–
3,406
3,406
Derivatives
Other liabilities
Accrued income and prepaid expenses
Total liabilities
1,007
–
–
1,397
2,404
1,007
169
–
–
298
467
169
1,189
–
3,406
86,526
91,295
länsförsäkringar liv 2011 45
Note 34
ASSETS AND LIABILITIES PER MEASUREMENT CATEGORY, cont.
Determination of fair value through published price quotations or valuation techniques
Level 1 – measurement at listed prices in an active market
Level 2 – calculated values based on observable market listings
Level 3 – large individual unlisted investments valued by independent parties or in
accordance with the trend for relevant comparative index. The measurement is based largely
on cash-flow calculations. Small holdings are measured at equity per share based on the
most recent company report. Delisted, insolvent companies are measured at zero, if no other
listing can be found. For holdings in Private Equity funds, measurement is received quarterly
from each fund; the measurement follows guidelines from European Private Equity and
Venture Capital Association. The measurement is certified annually by each fund auditor.
Parent Company
Group
Dec. 31, 2011
Level 1
Level 2
Level 3
Instruments
with published price
quotations
Valuation
techniques
based on
observable
market data
Valuation
techniques
based on
unobservable
market data
Total
Assets
Level 2
Level 3
Instruments
with published price
quotations
Valuation
techniques
based on
observable
market data
Valuation
techniques
based on
unobservable
market data
Total
Assets
Shares and participations
6,044
Bonds and other interestbearing securities
Derivatives
Assets for conditional bonus
Prepaid expenses and
accrued income
5
12,851
18,900
Shares and participations
6,044
5
12,851
18,900
Bonds and other interestbearing securities
82,557
4,601
598
87,756
–
4,563
–
4,563
82,557
1,095
598
84,252
–
4,563
–
4,563
Derivatives
3,984
18
–
4,003
Assets for conditional bonus
3,985
18
–
4,003
Prepaid expenses and
accrued income
1,115
1
–
1,116
25
2,093
–
2,118
1,115
1
–
1,116
25
2,093
–
2,118
Liabilities
Liabilities
Derivatives
Dec. 31, 2010
Dec. 31, 2011
Level 1
Level 1
Level 2
Level 3
Instruments
with published price
quotations
Valuation
techniques
based on
observable
market data
Valuation
techniques
based on
unobservable
market data
Total
Assets
Shares and participations
Bonds and other interestbearing securities
22,369
5
14,305
Instruments
with published price
quotations
Total
22,355
5
14,305
36,664
Bonds and other interestbearing securities
58,845
3,904
567
63,317
7
2,867
–
2,874
Other financial investment
assets
904
–
–
904
Assets for conditional bonus
174
–
–
174
6
–
–
6
651
–
–
651
2
3,404
–
3,406
–
567
59,445
–
2,874
Unit-linked insurance assets
54,032
–
–
54,032
Assets for conditional bonus
174
–
–
174
Prepaid expenses and accrued
income
Level 3
Valuation
techniques
based on
unobservable
market data
Shares and participations
2,867
Other receivables
Level 2
Valuation
techniques
based on
observable
market data
36,679
7
Other financial investment
assets
Dec. 31, 2010
Level 1
Assets
58,878
Derivatives
Derivatives
904
–
–
904
6
–
–
6
651
–
–
651
Liabilities
Derivatives
Other receivables
Prepaid expenses and
accrued income
Liabilities
Derivatives
Unit-linked insurance
liabilities
–
54,034
–
54,034
Derivatives
2
3,404
–
3,406
Financial instruments measured at fair value according to valuation techniques
based on unobservable market data.
Financial assets measured
at fair value in profit and loss
Group and Parent Company
Opening balance, January 1, 2011
Financial assets measured
according to fair value option
14,872
Total profits and losses recognised:
– recognised in net profit for the year,
Shares and participations
– recognised in net profit for the year, Bonds and
other interest-bearing securities
Acquisition cost
Transfer to level 3
Closing balance, December 31, 2011
46 länsförsäkringar liv 2011
–1,456
32
2
–
13,450
Note 35
NET INVESTMENT INCOME, PER MEASUREMENT CATEGORY
Group
Dec. 31, 2011
Parent Company
Dec. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Profit/loss by measurement category
Derivative assets intended for risk management, non-hedge accounting
5,477
–3,709
5,477
–3,709
–851
10,350
2,197
7,207
Other financial liabilities
–1
–5
–1
–1
Loan receivables and accounts receivable
39
–38
39
–10
40
418
40
393
–
–
27
22
–100
–80
–100
–80
Other financial assets measured at fair value in profit and loss
Items not distributed by category
Exchange-rate gains/losses
Impairment of shares and participations
Asset management expenses
Non-financial items not included in investment income, net
Total investment income, net
Note 36
171
662
97
563
4,775
7,598
7,776
4,385
RECOVERY DATES
Group 2011
SEK M
Not more
than 1 year
Group 2010
More than
1 year
Parent Company 2011
Not more
than 1 year
More than
1 year
Not more
than 1 year
Parent Company 2010
More than
1 year
Not more
than 1 year
More than
1 year
Assets
Goodwill
–
–
–
1,162
–
–
–
–
12
–
8
16
–
–
–
–
Investment property/Land and buildings
–
5,867
–
5,628
–
1,480
–
1,442
Shares and participations in Group companies
–
–
–
–
–
765
–
5,785
6,396
Other intangible assets
Interest-bearing securities issued by Group companies and loans to
Group companies
4,860
102
–
2,492
4,860
3,606
–
Shares and participations in associated companies
–
338
–
341
–
300
–
313
Shares and participations
–
18,900
15
36,664
–
18,900
–
36,664
Bonds and other interest-bearing securities
1,384
77,907
1,812
55,142
1,384
77,907
1,812
55,109
Derivatives
1,625
2,938
2,455
419
1,625
2,938
2,455
419
–
–
–
904
–
–
–
904
Other financial investment assets
Deposits with companies that have ceded reinsurance
Assets for conditional bonus
Unit-linked insurance assets
Provision for claims outstanding
Deferred tax assets
Other receivables
–
–
–
–
–
–
–
–
36
3,967
–
174
36
3,967
–
174
–
–
1,986
52,046
–
–
–
–
75
522
64
599
75
522
63
593
–
7
–
106
–
–
–
–
1,495
–
2,902
–
1,435
–
2,740
–
Cash and bank balances
7,279
–
7,336
–
7,279
–
7,322
–
Accrued interest and rental income
1,036
–
589
–
1,036
–
589
–
159
405
301
1,190
159
405
171
444
91
–
78
–
80
–
51
–
18,050
110,953
17,546
156,883
17,970
110,790
15,203
108,243
5,426
99,146
4,125
77,575
5,426
99,146
4,125
77,575
400
1,940
439
1,970
400
1,940
430
1,915
36
3,967
–
174
36
3,967
–
174
Unit-linked insurance liabilities
–
–
1,936
52,098
–
–
–
–
Provisions for pensions and similar commitments
7
26
4
36
5
20
4
26
Deferred acquisition costs
Other prepaid expenses and accrued income
Liabilities
Life-assurance reserve
Provision for claims outstanding
Conditional bonus
–
133
–
100
–
–
–
–
Current tax liabilities
Deferred tax liabilities
13
–
240
–
–
–
100
–
Deposits from reinsurers
75
522
64
599
75
522
63
593
Due to credit institutions
–
12
–
13
–
12
–
13
Derivatives
1,498
620
941
2,465
1,498
620
941
2,465
Other liabilities
3,475
140
1,508
–
3,807
140
2,454
–
716
–
537
–
648
–
467
–
11,646
106,506
9,794
135,030
11,895
106,367
8,584
82,761
Other accrued expenses and deferred income
länsförsäkringar liv 2011 47
Note 37
SUPPLEMENTARY INFORMATION ABOUT CASH FLOWS
Group
SEK M
Interest payments, inward
Interest payments, outgoing
Dividends received
Parent Company
2011
2010
2011
2010
1,731
1,731
1,760
1,760
366
335
366
339
5,106
2,864
4,369
1,948
Both interest payments and dividends are recognised in the operating activities.
Of the cash and cash equivalents,
restrictions exist in the disposal rights of
the bank accounts pledged as contingency
reserve for interest and equity futures
–
–
–
–
Changes in technical reserves
20,489
8,602
22,945
481
Changes in value and results of
investment assets
–2,275
–59
274
–823
6,538
–2,873
–137
56
–2,643
–
–
–
Specification of non-cash items:
Changes in value in investment assets
for which the policyholder bears the risk
Capital gains/losses, divestment of
subsidiaries
Other
939
–130
151
204
Total
23,048
5,539
23,233
–82
Note 38
DISCLOSURES ON RELATED-PARTY TRANSACTIONS, etc.
Organisation
Länsförsäkringar Liv Försäkringsaktiebolag is a wholly owned subsidiary of Länsförsäkringar
AB, which in turn is owned by 23 customer-owned regional insurance companies and 14
local insurance companies.
Joint operations are conducted in the Länsförsäkringar AB Group, which provides services
to Länsförsäkringar Liv. This pertains to development, maintenance, services such as financial, legal, risk control, compliance, security, staff, communication and operation, management and development of joint IT systems. The organisation means that there are a large
number of current transactions and non-recurring transactions between the companies
within the Länsförsäkringar Alliance.
Related legal entities and related parties
Länsförsäkringar Liv’s operations are conducted in accordance with mutual policies. This
means that no profits may be distributed to shareholders.
Related legal entities include all companies within the Länsförsäkringar AB Group, the
regional insurance companies and the local insurance companies. All of these companies
combined comprise the Länsförsäkringar Alliance. Related key persons are Board members,
senior executives and their close family members and companies owned by them.
Remuneration to Board members and senior executives is found in Note 10 Employees,
staff costs and remuneration to senior executives. In all other respects, no transactions took
place between these individuals and their related parties apart from normal customer transactions.
Guidelines for managing conflicts of interest
It is important that there is a well-functioning system to prevent disguised dividends or other
unpermitted capital use, while utilising policyholders’ interest in enjoying economies of scale
and other benefits from being part of a group. Länsförsäkringar Liv’s Board of Directors has
established guidelines for managing conflicts of interest aimed at serving as a tool to promote internal control.
Cost price policy
To achieve accurate cost distribution, an overall starting point for pricing transactions with
related legal entities is that pricing must be based on direct and indirect costs and that the
pricing must be based on the cost price policy. The cost price policy entails that the price is
set in the form of a total cost that is not charged with any profit mark-up. In addition, no pricing may exceed the market level.
The pricing and cost distribution of services in development and maintenance of IT systems and other services is currently distributed in groups of basic services (for example, IT
services), Group overhead (for example, compliance), mandatory services (for example, HR)
and in individual services. The common factor for these is that costs must be distributed as
far as possible based on an assessment of actual utilisation.
Basic services include the mandatory basic service offering provided by Länsförsäkringar
AB to Länsförsäkringar Liv through the Group-wide units. Group overheads pertain to costs
consisting of Länsförsäkringar AB’s President and staff, as well as expenses that are directly
due to the fact that Länsförsäkringar AB with its subsidiaries is a Group. The mandatory serv­
ices also include common development and service, maintenance and development of the
shared brand, as well as management and operation of the Group’s joint IT systems provided
by Länsförsäkringar AB.
In addition, there is a pricelist for individual services, for example, project management.
Individual services pertain to services that are individually priced and which Länsförsäkringar
Liv may choose to purchase from Länsförsäkringar AB when necessary.
48 länsförsäkringar liv 2011
Prices and cost distribution within the Länsförsäkringar AB Group are prepared in the
Group’s pricing committee and in the joint company management, which includes the President of Länsförsäkringar Liv. The Board of Länsförsäkringar Liv then decides on the pricelist
and cost distribution for the coming year in conjunction with the annual business planning.
Decision-making process
The transactions are based on written agreements at market standards and terms. The decision-making documentation prior to a new agreement with related legal entities must be written and contain a risk assessment for conflicts of interest. The decision-making documentation must also include a brief requirement and impact analysis, as well as the person responsible for the transaction.
There is an assignment agreement that regulates the assignments that Länsförsäkringar
Liv has performed on behalf of Länsförsäkringar AB or other related party. The assignment
agreement also states how control and planning of the outsourced operation is to occur.
There are also specifications to the assignment agreements that describes each assignment’s
service content, service level and execution.
Follow-up
Cost distribution is followed-up on a monthly basis. The total costs and internal costs are
reported to the Board of Länsförsäkringar Liv and company management. The policies are
documented in the finance handbook and prices for purchased services are published on
Länsförsäkringar’s intranet.
Länsförsäkringar Liv’s transactions with related parties
The following section provides a description of the most significant related-party transactions
in 2011. The transactions are recognised according to size.
1) Länsförsäkringar Liv’s divestment of Länsförsäkringar Fondliv to Länsförsäkringar AB
In 1999, Länsförsäkringar AB divested all shares in Länsförsäkringar Fondliv to Länsförsäkringar Liv. A strong reason for this divestment was the anticipated advantages in a coordinated development of Länsförsäkringar’s life assurance offering. Fondliv has now become
so large that the company is no longer suited as an investment asset for Länsförsäkringar Liv.
Accordingly, by divesting the shares in Fondliv, Länsförsäkringar Liv will achieve increased
flexibility in the company’s asset management and improved conditions for solvency and
debt coverage. It is thus anticipated that efficiency in Länsförsäkringar Liv’s asset management will increase. By creating an independent position for Fondliv as a subsidiary of the
Länsförsäkringar AB Group, will also supplement the mutually operated Länsförsäkringar Liv
with a profit-distributing limited liability insurance company where new life assurance products can be developed. The purchase consideration for the shareholding amounted to SEK
4.4 billion, which was paid on date of taking possession, October 31, 2011, and SEK 950 M
will be paid in seven annual instalments from October 12, 2012.
2) Regional insurance companies’ distribution remuneration
The regional insurance companies manage and administer Länsförsäkringar Liv’s insurance
products. Länsförsäkringar Liv pays remuneration for these services according to agreement.
In 2011, remuneration for new sales and additional occupational insurance was paid to the
regional insurance companies. Throughout 2011, capital-based remuneration was also paid,
as well as remuneration for portfolio management based on premiums paid and in some
cases as individual remuneration. A three-year cancellation terms applies for commission for
sales conducted prior to the discontinuation of new sales under traditional management. The
discontinuation of underwriting new sales of traditional management and the cancellation of
capital-based remuneration on December 31, 2011 mean that the remuneration agreement
was amended. Following negotiations, the regional insurance companies received compensation of SEK 210 M.
3) IT services and products from Länsförsäkringar AB
Länsförsäkringar AB provides IT services and products according to a framework agreement
from 2004. Pricing is based on the cost-price policy. Costs for joint financial infrastructure
are distributed according to various keys depending on the service to provide the most accurate picture possible. The framework agreement applies until further notice, with 12 months’
termination notice.
4) Occupational pension for employees of the Länsförsäkringar Alliance
Länsförsäkringar Liv provides occupational pensions for employees within the Länsförsäkringar Alliance. These pension benefits are based on agreements in the Swedish labour market
and the premiums are market based.
5) Management remuneration from Länsförsäkringar Fondförvaltning
Pursuant to an applicable partnership agreement from 2007, Länsförsäkringar Fondförvaltning provides investment funds that can be selected by Länsförsäkringar Fondliv’s insurance
customers. Länsförsäkringar Fondliv receives management remuneration on the value of the
participations in Länsförsäkringar Fondförvaltning’s mutual funds that were acquired and
held by Länsförsäkringar Fondliv. The cooperation agreement applies until further notice,
with six months’ termination notice.
6) Service offerings to Länsförsäkringar Fondliv
Länsförsäkringar Fondliv purchases services from Länsförsäkringar Liv. The service offerings
are regulated through agreements. The agreement applies until further notice, with six
months’ termination notice. The pricing is based on the cost-price policy based on a pricelist
that is established annually.
7) Service and development from Länsförsäkringar AB
A more detailed description of pricing and organisation for these services is available in the
above section about regulations for internal transactions of a continuous nature.
Note 38
DISCLOSURES ON RELATED-PARTY TRANSACTIONS, ETC. cont.
Mandatory services within Länsförsäkringar Alliance
Costs for the mandatory services within the Länsförsäkringar AB Group are distributed among
the three core businesses of Non-life, Life assurance and Bank. The total operational costs
are used as the distribution basis between the core businesses where no clear cost driver may
be identified.
Individual service within Länsförsäkringar Alliance
Prices for individual services are set to reflect consumption of the product or service and
invoicing is according to agreement with the customer.
Basic service in the Länsförsäkringar AB Group
The service centre and each Group-wide unit that provides basic service within the Länsförsäkringar AB Group prepares an annual documentation displaying the units that are counterparties, the products and services provided, content, service level, price structure and
price level. This pertains for example to such services as IT, rent for premises and asset management. Länsförsäkringar Liv leases premises from Länsförsäkringar AB and pays marketbased rent. The lease contract applies until December 31, 2016.
Costs for Group overhead
The costs for Group overhead are distributed between the units within the Länsförsäkringar
AB Group. For Group overhead, a document must be prepared annually providing details on
costs, meaning the services and activities executed and the staff/function responsible, and
the distribution of these costs between the business units, etc.
8) Bonds in Länsförsäkringar Hypotek AB
Länsförsäkringar traditional life assurance owns listed bonds issued by Länsförsäkringar
Hypotek AB with a fair value of SEK 2,815 M.
9) Bonds and subordinated debts in Länsförsäkringar Bank AB
Länsförsäkringar traditional life assurance owns listed bonds issued by Länsförsäkringar
Hypotek AB with a fair value of SEK 558 M, as well as listed subordinated debts in
­Länsförsäkringar Bank AB, with a fair value of SEK 492 M.
11) Reinsurance agreements with the regional insurance companies
On January 1, 2007, Länsförsäkringar Liv signed excess loss reinsurance with 22 of the 24
regional insurance companies pertaining to life contingency. The excess loss reinsurance
model is based on the risk transaction to be reinsured within the Länsförsäkringar Alliance
being distributed based on participations. Participations are distributed based on the
regional insurance companies’ share of premium income in Länsförsäkringar Liv. The agreement applies for one calendar year at a time, with six months’ termination notice. This year,
23 regional insurance companies participate in the excess loss reinsurance model. The
amount of SEK 51 M (49) stated in the table below for related-party transactions is net of the
reinsurance business.
12) Asset management in Länsförsäkringar AB and external managers
Länsförsäkringar AB manages Länsförsäkringar Liv’s investment assets through its asset
management department and a number of external managers. For management, Länsförsäkringar Liv pays remuneration in relation to its proportion of the asset management
department’s actual operating expenses. The remuneration is calculated on cost price applicable at any time pursuant to adopted financial control policies within the Länsförsäkringar
AB Group. For external management, the companies pay remuneration of a corresponding
amount and on the same date as Länsförsäkringar AB pays remuneration to external man­
agers. The agreement applies until further notice, with 12 months’ termination notice.
12) Agreement on property management with Humlegården Fastigheter AB:
Länsförsäkringar Liv pays remuneration calculated on cost price to Humlegården Fastigheter
AB for management of Länsförsäkringar Liv’s Stockholm properties.
12) Shareholders’ contribution to Länsförsäkringar Fondliv
In 2010, Länsförsäkringar Liv paid shareholders’ contribution to Länsförsäkringar Fondliv.
13) Divestment of shares in Humlegården Fastigheter AB
Länsförsäkringar Liv divested its holdings in Humlegården Fastigheter AB to Humlegården
Holding I AB in 2010. The purchase consideration amounted to SEK 4 M, corresponding to
the shares’ carrying amount.
10) Loans to companies within the Länsförsäkringar AB Group
To manage short-term liquidity flows, there is a promissory note between Länsförsäkringar Liv
and Länsförsäkringar Fondliv amounting to SEK 250 M. The interest-rate for the loan corresponds to STIBOR plus 1.25 to be paid quarterly. There are also a number of promissory
notes between Länsförsäkringar Liv and the wholly owned property companies, as well as
between the companies within the property group. Interest income for transactions within
Länsförsäkringar Liv is presented in the table below.
23 regional
insurance companies
Länsförsäkringar
Bank
Länsförsäkringar
Hypotek
Fastighets AB
Apelsinen 5
Länsförsäkringar
Sak
Länsförsäkringar
Fondliv AB
Länsförsäkringar AB
Humlegården
Holding
Länsförsäkringar
Liv
Humlegården
Fastigheter AB
Länsförsäkringar
Fondförvaltning
Fastigheten
Dykarhuset AB
Fastighets AB
Sprängaren 8
Fastighets AB
Solnaaprikosen 3
Fastighets AB
Storsundet
Fastighets AB
Solnasmultronet 2
KB Cirkusängen
Länsförsäkringar
Komplement AB
Fastighets KB
Automobilpalatset
HWH Katsan KB
KB Plutonia
KB
Hålstenen
Fastighets AB
Cirkusstenen
The image is not a complete organisational diagram. The green boxes
show subsidiaries and associated companies, light-blue boxes show
other Group companies and the dark-blue boxes show the owners.
länsförsäkringar liv 2011 49
Note 38
DISCLOSURES ON RELATED-PARTY TRANSACTIONS, ETC. cont.
The tables below show the significant related-party transactions between companies within Länsförsäkringar Liv and legal entities related to the Group, as reported above.
The transactions are shown according to sizes.
Länsförsäkringar Liv’s transactions with related parties
2011
Character
Counterparty
Income
2010
Expenses
Income
Expenses
Text reference
Distribution remuneration, 2011
incl. remuneration capital
24 regional insurance companies
–
973
–
878
2
IT services and products
Länsförsäkringar AB
–
286
–
306
3
Occupational pension premiums for employees
within the Länsförsäkringar Alliance
Länsförsäkringar Alliance
232
–
267
–
4
Management remuneration
Länsförsäkringar Fondförvaltning AB
179
–
211
–
5
Service and development, of which
Länsförsäkringar AB
7
–
262
–
153
– Individual service
–
154
–
56
– Mandatory services
–
27
–
20
– Basic service
–
76
–
74
– Group overhead
–
5
–
3
107
–
96
–
8
–
–
–
9
Interest rate
Länsförsäkringar Hypotek AB
Interest rate
Länsförsäkringar Bank AB
25
Service offerings
Länsförsäkringar Fondliv AB
24
–
–
–
10
Reinsurance agreement
23 regional insurance companies
–
51
–
49
11
Asset management
Länsförsäkringar AB
–
61
–
45
12
Property management
Humlegården Fastigheter AB
–
36
–
33
13
Purchase consideration
Humlegården Holding I AB
14
–
–
4
–
567
1,669
574
1,464
Income
Expenses
Income
Expenses
Transactions between Länsförsäkringar Liv and its subsidiaries
2011
2010
Character
Counterparty
Shareholders’ contributions
Länsförsäkringar Fondliv AB
–
–
–
400
Text reference
6
Service offerings
Länsförsäkringar Fondliv AB
165
–
172
–
10
Interest rate
Länsförsäkringar Liv AB’s subsidiaries
92
–
32
–
8
257
–
204
400
Receivables
Liabilities
Receivables
Liabilities
Länsförsäkringar Hypotek AB
2,878
–
2,553
–
Länsförsäkringar Bank AB
1,066
–
–
–
Länsförsäkringar AB
914
87
7
35
Länsförsäkringar Fondliv AB
–
Related-party receivables and liabilities – Group
Dec. 31, 2011
Counterparty
Dec. 31, 2010
250
24
–
Länsförsäkringar Fondförvaltning AB
6
–
7
–
Länsförsäkringar Grupplivförsäkrings AB
–
1
2
3
Regional insurance companies
–
51
–
49
Länsförsäkringar Sak AB
1
4
–
25
5,115
167
2,569
112
Receivables
Liabilities
Receivables
1,655
10
1,650
29
–
–
524
792
Fastighets KB Automobilpalatset
524
77
523
54
Fastighets AB Apelsinen
271
31
270
26
Fastigheten Dykarhuset AB
268
63
264
62
KB Plutonia
233
12
233
16
HWH Katsan KB
176
35
176
28
KB Hålstenen 2
171
78
170
64
KB Cirkusängen
114
1
–
–
Fastighets AB Sprängaren 8
91
13
94
11
Fastighets AB Cirkusstenen
–
35
–
22
Fastighets AB Solnasmultronet
–
20
–
18
Fastighets AB Solnaaprikosen
–
18
–
13
3,503
393
3,904
1,135
Related-party receivables and liabilities – Parent Company
Dec. 31, 2011
Counterparty
Fastighets AB Storsundet
Länsförsäkringar Fondliv AB
50 länsförsäkringar liv 2011
Dec. 31, 2010
Liabilities
The company’s income statement and balance sheet will be adopted at the Annual General Meeting in May 2012.
Stockholm, March 22, 2012
Karl Olof Hammarkvist Chairman
Gunnar Wetterberg
Deputy Chairman
Lennart Atteryd
Board member
Sten Dunér
Board member
Gunvor Engström
Board member
Sten Lundqvist
Board member
Ulrica Messing
Board member
Karin Åkesson Rehnholm
Board member
Christer Ekehov
Employee representative Marita Viklund
Employee representative
Jörgen Svensson
President
Our Auditor’s report was submitted on March 22, 2012
Mårten Asplund
Authorised Public Accountant
Gunilla Wernelind
Authorised Public Accountant
länsförsäkringar Liv 2011 51
AUDITOR’S REPORT
To the Annual General Meeting of Länsförsäkringar Liv Försäkringsaktiebolag (publ)
Corp. Reg. No. 516401-6627
Report on the annual accounts and consolidated financial
statements
We have audited the annual accounts and the consolidated financial
statements of Länsförsäkringar Liv Försäkringsaktiebolag (publ)
for 2011.
Responsibilities of the Board of Directors and the President for
the annual accounts and consolidated financial statements
The Board of Directors and the President are responsible for the
preparation and fair presentation of these annual accounts and consolidated financial statements in accordance with the Annual
Accounts Act for Insurance Companies, and for the internal control
deemed necessary by the Board of Directors and the President for
the preparation of annual accounts that are free from material misstatement, whether such misstatement is due to fraud or error.
Auditors’ responsibility
Our responsibility is to express an opinion on the annual accounts
and consolidated financial statements based on my our audit. We
conducted our audit in accordance with International Standards on
Auditing and generally accepted auditing standards in Sweden.
These standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance that
the annual accounts and consolidated financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual accounts
and consolidated financial statements. The auditor chooses such
procedures based on such assessments as the risk of material misstatement in the annual accounts and consolidated financial statements, whether such misstatement is due to fraud or error. In making these risk assessments, the auditor considers internal control
measures relevant to the company’s preparation and fair presentation of the annual accounts and consolidated financial statements in
order to design audit procedures that are appropriate taking the circumstances into account, but not for the purpose of expressing an
opinion on the effectiveness of the company’s internal control. An
audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made
by the Board of Directors and the President, as well as evaluating
the overall presentation of the annual accounts and consolidated
financial statements.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
Opinions
In our opinion, the annual accounts and consolidated financial
statements have been prepared in accordance with the Annual
Accounts Act for Insurance Companies and present fairly, in all
material respects, the financial position of Länsförsäkringar Liv
Försäkringsaktiebolag (publ) as of December 31, 2011 and its
financial performance and cash flows for the year in accordance
with the Annual Accounts Act for Insurance Companies. The statutory Board of Directors’ Report is consistent with the other parts of
the annual accounts and the consolidated financial statements.
We therefore recommend that the annual meeting of shareholders adopt the income statement and balance sheet for the Parent
Company and the Group.
Report on other legal and regulatory requirements
In addition to our audit of the annual accounts and consolidated
financial statements, we have also examined the proposed appropriations of the company’s profit or loss and the administration of
the Board of Directors and the President of Länsförsäkringar Liv
Försäkringsaktiebolag (publ) for the year 2011.
Responsibilities of the Board of Directors and the President
The Board of Directors is responsible for the proposal concerning
the appropriation of the company’s profit or loss, and the Board of
Directors and the President are responsible for administration
under the Companies Act and the Swedish Insurance Business Act.
Auditors’ responsibility
Our responsibility is to express an opinion with reasonable assurance on the proposed appropriations of the company’s profit or loss
and on the administration based on my audit. We conducted the
audit in accordance with generally accepted auditing standards in
Sweden.
As a basis for our opinion on the Board of Directors’ proposed
appropriations of the company’s profit or loss, we examined
whether the proposal complies with the Companies Act and the
Swedish Insurance Business Act.
As a basis for our opinion concerning discharge from liability, in
addition to our audit of the annual accounts, we examined significant decisions, actions taken and circumstances of the company in
order to be able to determine the liability, if any, to the company of
any Board member or the President. We also examined whether
any Board member or the President has, in any other way, acted in
contravention of the Companies Act, the Insurance Business Act,
the Annual Accounts Act for Insurance Companies or the Articles
of Association.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
Opinions
We recommend to the annual meeting of shareholders that the
profit be appropriated in accordance with the proposal in the statutory Board of Director’s Report and that the members of the Board
of Directors and the President be discharged from liability for the
fiscal year.
Stockholm, March 22, 2012
Mårten Asplund
Authorised Public Accountant 52 länsförsäkringar Liv 2011
Gunilla Wernelind
Authorised Public Accountant
Corporate Governance Report
Länsförsäkringar Liv is a wholly owned subsidiary of Länsförsäkringar AB, which in turn is owned by 23 customer-owned
regional insurance companies and 14 local insurance companies.
Länsförsäkringar Liv is operated in accordance with mutual principles, which entails that the earnings are not distributed to the
owner; they remain with the customers.
Länsförsäkringar Liv complies with the Swedish Code of Corporate Governance (referred to below as the Code) in the applicable
parts, with consideration of the fact that the company is not a stockmarket company. The major deviations from the provisions of the
Code and explanations for such deviations are presented below.
Notice
– Notice, publication of information prior to, attending and holding of an Annual General Meeting. Deviation from the provisions of the Code with respect to the fact that the company is not
a stock-market company and only has one shareholder.
Mandate period
– The mandate period for Board members is, as a general rule, two
years. Deviation from the provision of the Code stipulating a
maximum mandate period of one year due to the supremacy of
the Annual General Meeting to dismiss and appoint a Board
member irrespective of mandate period. A mandate period that is
longer than one year contributes to ensuring continuity and
establishing competence within the Board.
This Corporate Governance Report is unaudited.
General Meeting
Shareholders exercise their voting rights at the Annual General
Meeting. Decisions are made at the Annual General Meeting pertaining to: the Annual Report, the election of members of the Board
and auditors, remuneration to Board members and auditors and
other important matters to be addressed in accordance with laws or
the Articles of Association. The proposal for remuneration to Board
members presented at the Annual General Meeting is specified for
the Chairman, Deputy Chairman and other Board members, and
includes remuneration for committee work.
Nomination process
The Annual General Meeting of Länsförsäkringar AB appoints a
Nomination Committee which, in addition to submitting proposals
regarding Länsförsäkringar AB in consultation with the President of
Länsförsäkringar AB, , is also charged with the task of presenting,
proposals regarding the Board of Directors and auditors of Länsförsäkringar Liv and other subsidiaries, and fees to these members
and auditors. The Nomination Committee follows an instruction
adopted by the Annual General Meeting of Länsförsäkringar AB.
Since the 2011 Annual General Meeting, the Nomination Committee has comprised Karin Starrin (Chairman) (Länsförsäkringar
­Halland), Göran Trobro (Deputy Chairman) (Länsförsäkringar
Göinge Kristianstad), Ulf W Eriksson (Länsförsäkringar Värmland), Anna-Greta Lundh (Länsförsäkringar Södermanland) and
Conny Sandström (Länsförsäkringar Västerbotten).
Länsförsäkringar Liv’s Policyholders’ Association
Länsförsäkringar Liv’s Policyholders’ Association was formed
with the purpose of promoting policyholders’ interests. Members
of the association are appointed by the policyholders in Länsförsäkringar Liv. To secure fulfilment of the purpose and ensure
that policyholders acquire influence and insight into the company’s
operations, the association is entitled to appoint two members to
Länsförsäkringar Liv’s Board of Directors. In matters of particular
significance, the association will receive special information and be
able to submit special statements. Since highly significant conflicts
of interest between the life-assurance and the non-life insurance
collective may arise, the association is to appoint an independent
review in consultation with Länsförsäkringar AB.
External auditors
In accordance with the Articles of Association, Länsförsäkringar
Liv shall have between one and three auditors and between zero
and three deputy auditors. At the 2010 Annual General Meeting,
Mårten Asplund and Gunilla Wernelind, KPMG Bohlins AB were
appointed as auditors for the period up to and including the Annual
General Meeting in 2012.
Composition of Board of Directors
In accordance with the Articles of Association, the Board of Directors of Länsförsäkringar Liv shall comprise between eight and
fourteen Board members, with between zero and six deputies.
Board members are elected for a maximum mandate period of two
years. In addition, members appointed by trade unions are also
members of the Board. The company has no time limit for the
length of time for which a member may sit on the Board. The company has no age limit for the Board members. Two of the members
shall be appointed by Länsförsäkringar Liv’s Policyholders’ Association. A majority of the Board members, including the employee
representatives, must be independent in relation to Länsförsäkringar Liv and other companies in the same Group. The Chairman of
the Board is appointed by the Annual General Meeting. The Board
appoints a Deputy Chairman from within its ranks of independent
members. The President is not a member of the Board.
The Board currently comprises 10 regular members and two deputies. Six of the members are appointed by the General Meeting, two
by Länsförsäkringar Liv’s Policyholders’ Association and two members and two deputies by the trade unions. Six of the members are
independent. The Board members are listed on page 57 in the com­
pany’s Annual Report.
Board responsibilities and allocation of duties
The Board is responsible for the organisation and administration of
the company and shall handle and make all decisions concerning
issues of material significance and an overall nature relating to the
company’s operations. This includes determining an appropriate
organisation, the goals and strategies of the operation and guidelines for control and governance.
länsförsäkringar Liv 2011 53
Every year, the Board adopts a formal work plan. The formal work
plan includes regulations on the duties and responsibilities of the
Board and its Chairman, the number of Board meetings, procedures
for reporting on the operations reports and financial statements, as
well as procedures for Board meetings, notices of meetings, presentation of material, delegation of work duties within the Board,
conflict of interests and disqualification.
The Board shall remain informed about the performance of the
company to continuously assess the company’s financial situation
and position. Through its formal work plan, the Board has established that financial reporting shall take place in accordance with
established instructions and through regular Board meetings.
The Board has established a Finance Committee, an Audit Committee and a Remuneration Committee. The duties of the Committee
are determined by the Board in its formal work plan or in separate
instructions. None of the Committees has any general decision-making mandate. Each Committee must regularly report on its activities
to the Board.
Every year, the Board establishes a directive for the President,
insurance guidelines, investment guidelines and guidelines for managing conflicts of interest as well as a large number of guidance
docu­ments for the operations.
Based on legal regulations and the general advice of the Swedish
Financial Supervisory Authority, the Board stipulates principles for
the organisation, governance and distribution of work duties between
the company’s various bodies and positions in a company manual.
The manual shall function as guidance and support for Länsförsäkringar Liv’s daily work.
The Board conducts annual strategic seminars and evaluations of
its own work. The Board also conducts annual evaluations of the
work of the President and his terms of employment. The Board meets
the company’s auditors at least once per year (see also Audit Committee below).
Chairman
According to the formal work plan, the Chairman shall lead the
Board’s work and ensure that the Board fulfils its duties. The Chairman shall also ensure that the Board meets as required, is provided
with the opportunity to participate in meetings and receive satisfactory information and documentation for decision-making, and
applies an appropriate working methodology. Through ongoing
contact with the President, also between Board meetings, the
Chairman shall remain informed of significant events and developments in the company, and support the President in his work.
Internal audit
The Board appointed an internal audit function independent from
the operating activities, with the primary task of ensuring that the
scope and direction of the operations agree with the guidelines
issued by the Board and that the operations are being conducted
towards the targets established by the Board. The internal audit
function is also to examine and assess the organisation of the bank,
its procedures, governance and control of the operations. The
Board has adopted a separate instruction for the internal audit function.
The results of the review of the internal audit are reported in summary to the Board and in more detail to the Audit Committee.
Finance Committee
The Board of Directors of Länsförsäkringar Liv has appointed
three of the total of eight members in a Group-wide Finance Committee for the Länsförsäkringar AB Group. The Committee is
intended to be a forum for financial business environment and
macro­economic analyses, and for preparing matters concerning
asset management to be presented to the Board for decision. It is
also the duty of the Finance Committee to monitor compliance with
established objectives, investment orientation, chains of command,
etc. At the statutory Board meeting in 2011, Karl-Olof Hammar­
kvist, Gunnar Wetterberg and Anders Östryd were appointed to
represent Länsförsäkringar Liv in the Finance Committee. The
President is co-opted to the Committee.
Audit Committee
The Audit Committee is responsible for preparing the Board’s work
with quality assurance of the company and the Group’s internal
governance of financial reporting, risk management and risk control, regulatory compliance, other internal governance and for matters that the Board from time to time refers to the Audit Committee.
At the statutory Board meeting in 2011, Ulrica Messing (chair­
person), Lennart Atteryd, Sten Dunér and Sten Lundqvist were
appointed members of the Audit Committee.
Remuneration Committee
The Remuneration Committee shall prepare issues concerning
remuneration and other terms of employment for the President and
the principles for remuneration and other terms of employment for
company management. At the statutory Board meeting in 2011,
Karl-Olof Hammarkvist (chairperson), Gunnar Wetterberg and
Sten Dunér were appointed members of the Remuneration Committee.
Meetings and attendance
The table below shows the number of meetings held in each body
since the 2011 Annual General Meeting until February 2012, and
the attendance by each Board member: Two Board meetings were
held solely to deal with the issue of divesting the subsidiary Länsförsäkringar Fondliv Försäkringsaktiebolag to Länsförsäkringar
AB. At both of these meetings, only the independent members were
in attendance.
Independent
members
Total number of meetings
Lennart Atteryd
Board of
Finance
Audit Remuneration
Directors Committee ­Committee
­Committee
15
x
Sten Dunér
Christer Ekehov
3
2
2
14
–
2
–
11
2
2
12
–
–
–
x
10
–
–
–
5
–
–
x
15
2
–
2
Ulf Hamrén (deputy)
11
–
–
–
Sten Lundqvist
11
–
2
–
–
Gunvor Engström
Bitte Franzén-Molander
(deputy)
Karl-Olof Hammarkvist
Ulrica Messing
x
12
–
2
Karin Rehnholm Åkesson
x
13
–
–
–
Gunnar Wetterberg
x
13
3
–
2
Marita Wiklund
11
–
–
–
Anders Östryd1)
12
3
–
–
1) Stepped down from the Board of Directors on October 31, 2011.
54 länsförsäkringar Liv 2011
INTERNAL CONTROL AND RISK MANAGEMENT RELATING
TO FINANCIAL REPORTING
The Board of Directors is responsible for the control and governance of the operations. This responsibility includes the preparation of an efficient system for risk management and internal control. The risk-management system is to ensure that, for example,
risks can be continuously identified, managed and reported. Internal control is a process designed to provide reasonable assurance
that the objectives of the operations are achieved in terms of appropriate and effective business operations, reliable financial reporting
and information about the operations and compliance with appli­
cable internal and external regulations. The internal-control system
encompasses all parts of the organisation and is an integral part of
each operation within the Group.
Internal control is based on a system comprising three lines of
defence. The first line of defence is the operations, the second the
Compliance and Risk Control functions and the third the Internal
Audit function. The second and third lines of defence are inde­
pendent in relation to the first line.
The purpose of the internal control of the financial reporting is to
manage risks in the processes pertaining to the preparation of the
financial reporting and to ensure a high level of reliability in such
reporting.
Control environment
The foundation of internal control relating to financial reporting is
the control environment, consisting of the organisation, resolutions
procedure and allocation of authorities and responsibilities among
the various bodies that the Board of Directors and the President
have established. The control environment also includes the values
and corporate culture that the Board, President and management
communicate and work from to create effective and efficient operations.
The task of the Audit Committee is to assume responsibility for
preparing the Board’s work with quality assurance of the financial
reporting and to monitor the efficiency of the internal governance
and control. The Committee is also to prepare the direction, scope
and coordination of the work of the Internal Audit and study the
observations and recommendations from the external auditors.
The process for internal control and risk management is based on
the control environment and involves four main activities: risk
assessment, control activities, information and communications, and
follow-up.
Control activities
Risks in financial reporting are controlled through carefully prepared financial statements, standardised work routines with built-in
control functions and the evaluation of ongoing improvements. The
financial information is analysed and reviewed at various organisational levels before being presented publicly.
Efforts are ongoing to eliminate and reduce identified significant
risks affecting internal control relating to financial reporting. This
includes the development and improvement of control activities, and
efforts to ensure that employees have the appropriate expertise.
Information and communications
Internal guidance documents are subject to review and reassessment at least once a year. All guidance documents are published
internally. Every manager must ensure that the regulations are
communicated to affected subordinate staff.
Follow-up
The Internal Audit function was established to assist the Board in
following up and ensuring that the scope and direction of the operations complies with the guidelines issued by the Board and that the
operations are conducted in accordance with the targets established
by the Board. Based on its reviews, the Internal Audit function
shall form an opinion as to whether the operations are conducted in
an efficient manner, whether reporting to the Board provides a true
and fair view of the operations, and whether the operations are conducted in accordance with applicable internal and external regulations. The Internal Audit function reports to the Board of Directors.
The Compliance function’s task is to regularly identify, assess,
monitor and report on compliance risks, meaning the risk that inadequate compliance could tarnish the reputation of the company or
result in financial losses or sanctions in accordance with legislation
or regulations. Reporting is addressed to the respective Presidents
and Boards of Directors.
Risk assessment
Risk assessment includes identifying and analysing the source of
risks affecting internal control relating to financial reporting. The
company is governed using joint processes, in which risk management is built into every process and various methods are used to
value and limit risks and to ensure that identified risks are managed
in accordance with established guidance documents.
Based on the risk analysis, processes and control activities associated with key risks are mapped to identify material errors in the
financial reporting.
länsförsäkringar Liv 2011 55
Board of Directors and auditors
BOARD OF DIRECTORS
Karl-Olof Hammarkvist
Chairman
Born 1945. Elected 2006.
Lecturer, Senior Advisor, the Stockholm School
of Economics.
Other Board appointments: Board member of the
Royal Dramatic Theatre and the Foundation for
Financial Research.
Previous experiences: School of Economics,
Skandia International and Nordea.
Gunnar Wetterberg
Deputy Chairman
Born 1953. Elected 2004.
Socio-political head of the Swedish Confederation
of Professional Associations (SACO).
Previous experiences: Diplomat (The Ministry for
Foreign Affairs, Hanoi, Geneva), Ministry of Finance
and director of the Association of Local Authorities.
Lennart Atteryd
Born 1953. Elected 2010.
President of Ackordscentralen Malmö AB.
Previous experiences: Lawyer and partner in
Advokatfirman Vinge KB.
Sten Dunér
Born 1951. Elected 2009.
President of Länsförsäkringar AB. Other Board
appointments: Chairman of Länsförsäkringar Sak,
Länsförsäkringar Bank and Länsförsäkringar Fondliv,
the Swedish Insurance Federation and Swedish
Insurance Employers’ Association (FAO). Board
member of Fastighets AB Balder.
Previous experiences: CFO and other executive
positions within Länsförsäkringar AB.
Gunvor Engström
Born 1950. Elected 2005.
County Governor Blekinge.
Other Board appointments: Chairman of the Swedish
Association of Independent Schools, Board member
of Semcon, AP 3, Apoteksgruppen, Metria and
Hexicon.
Previous experiences: President of Bank 2,
President of Företagarna, worked for nine years at
the Government Offices (Ministry of Foreign Affairs
and the Ministry of Enterprise, Energy and
Communications), President of Tjänsteförbundet,
Marketing Manager of FFNS, Marketing Manager
of Newsec and own company.
56 länsförsäkringar Liv 2011
Sten Lundqvist
Born 1950. Elected 2009.
President of Länsförsäkringar Älvsborg.
Other Board appointments: Board member of
Länsförsäkringar Mäklarservice AB, Länsförsäkringar
Älvsborg Förvaltnings AB, Pro Security Bevakning
i Borås AB, L Finans AB, Piren Venture Holding AB,
Älvsborgs Larmcentral AB and AB Borås
Parkeringskontroll.
Previous experiences: Master of Business
Administration. Accounting and Financial Director
of Unisys, Financial Director of Skandia International,
President of Skandia US Holdings, President
of Edgecom AB and Senior Business Manager
of Ericsson AB.
Ulrica Messing
Born 1968. Elected 2006.
Entrepreneur.
Other Board appointments: Chairman of Astrid
Lindgren’s World, Wallenstam’s property company.
Previous experiences: Member of Parliament 1991–
2006, Cabinet minister in the Ministry of Enterprise,
Energy and Communications and the Ministry of
Employment 1996–2006.
Karin Åkesson Rehnholm
Born 1955. Elected 2004.
Lawyer
Other Board appointments: Board member and
President of Stiftelsen Hemmet.
Christer Ekehov
Born 1953. Employee representative since 1995.
Company lawyer at Länsförsäkringar Liv.
Other Board appointments: Employee representative
for Länsförsäkringar Fondliv Försäkringsaktiebolag
(publ) and the Swedish Confederation of Profes­
sional Associations, SACO, at Länsförsäkringar AB.
Marita Wiklund
Born 1965. Employee representative since 2007.
Works with: Business unit Finance and Risk/
Accounting and back office.
Previous experiences: The Swedish National
Union of Insurance Company Employees at
Länsförsäkringar AB since 2004.
Bitte Franzén Molander
Born 1961. Deputy, Employee representative
since 2008.
Works with: Insurance specialist traditional
insurance.
Other Board appointments: Employee representative
Länsförsäkringar Fondförvaltning AB (publ) and the
Swedish Confederation of Professional Associations,
SACO, at Länsförsäkringar AB.
Previous experiences: Many years’ experience from
life and contractual insurance industries.
AUDITORS
Mårten Asplund
Authorised Public Accountant KPMG.
Auditor in the company since 2010.
Gunilla Wernelind
Authorised Public Accountant KPMG.
Auditor in the company since 2010.
Group management
Jörgen Svensson
President.
Born 1959.
Previous experiences: President of
Länsförsäkringar Blekinge.
Board member of Länsförsäkringar Liv AB
and Wasa Run Off AB.
Various executive positions within Skandia and If.
Helen Hallåker
Born 1960.
Chief Legal Adviser.
Employed since 2010.
Previous experiences: Law Clerk, the Financial
Supervisory Authority, life assurance legal adviser
at Handelsbanken Liv, Company lawyer at AMF
Pension, rules and regulations consultant at KPMG.
Erling Andersson
Born 1955.
Corporate Senior Actuary. Employed since 2001.
Previous experiences: Actuary Skandia Liv.
Jakob Carlsson
Born 1967.
CFO.
Employed since 2007.
Previous experiences: Head controller at SPP and
Handelsbanken Liv, Group controller at Alecta.
Roger Lidberg
Born 1960.
Business Manager.
Employed since 1995.
Previous experience as Regional Manager of
Länsförsäkringar Stockholm, Regional Manager of
Wasa Försäkring, District Sales Manager at Skandia.
Board assignments: Länsförsäkringar Fondliv
Försäkringsaktiebolag (publ) and VI SI System AB.
länsförsäkringar Liv 2011 57
Definitions
Capital base
Parent Company: Total shareholders’ equity plus untaxed reserves according to
the balance sheet, and surplus values on assets.
Insurance group: Calculated according to the Swedish Financial Supervisory
Authority’s directives on group-based capital base (FFFS 2002:4). The
calculation was based on the aggregation and accounting method and includes
in practice Länsförsäkringar Liv AB and Länsförsäkringar Fondliv AB.
Collective consolidation capital
The market value of the total net assets less the company’s total commitments to
policyholders (guaranteed commitments and preliminarily distributed bonus) for
insurance policies that carry bonus rights.
Collective consolidation ratio
The ratio between the market value of the total net assets and the company’s
total commitments to policyholders (guaranteed commitments and preliminarily
distributed bonus) for insurance policies that carry bonus rights.
Direct yield
Interest income, interest expense, dividends and net profit from real estate in
relation to the average value of managed assets.
Management cost ratio
Operating expenses according to the income statement and claims adjustment
costs according to Note 8 as a percentage of average managed assets.
58 länsförsäkringar Liv 2011
Required solvency margin
Parent Company: The Swedish Insurance Business Act’s requirements of the
lowest permitted level of the capital base for insurance companies, which mainly
comprise 4% of the technical reserves in addition to 3 per mille of the positive
risk totals (mortality risks).
Insurance group: Calculated according to the Swedish Financial Supervisory
Authority’s directives on group-based solvency margins (FFFS 2002:4) and
includes in practice Länsförsäkringar Liv AB and Länsförsäkringar Fondliv AB.
Solvency capital
Shareholders’ equity, untaxed reserves (including deferred tax), as well as
surplus values on assets.
Solvency rate
The capital base in relation to required solvency margin (solvency ratio must
be at least 1).
Solvency ratio
The market value of the company’s total net assets in relation to guaranteed
commitments to policyholders (technical reserves according to the balance
sheet).
Total return
Total return on assets in traditional management prepared in accordance with
the Swedish Insurance Federation’s recommendation for annual reporting of
total return. The total return table is found in the Board of Directors’ Report.
Other assets and management expenses are not included in the calculation of
the total return.
Addresses
Länsförsäkringar Norrbotten
Box 937
SE-971 28 Luleå
Visit: Köpmantorget
Phone: +46 (0)920-24 25 00
E-mail: [email protected]
Länsförsäkringar Västerbotten
Box 153
SE-901 04 Umeå
Visit: Nygatan 19
Phone: +46 (0)90-10 90 00
E-mail: [email protected]
Länsförsäkringar Jämtland
Box 367
SE-831 25 Östersund
Visit: Prästgatan 18
Phone: +46 (0)63-19 33 00
E-mail: [email protected]
Länsförsäkringar Västernorrland
Box 164
SE-871 24 Härnösand
Visit: Stora Torget 3
Phone: +46 (0)611-36 53 00
E-mail: [email protected]
Länsförsäkringar Gävleborg
Box 206
SE-801 03 Gävle
Visit: Slottstorget 3
Phone: +46 (0)26-14 75 00
E-mail: [email protected]
Dalarnas Försäkringsbolag
Box 3
SE-791 21 Falun
Visit: Slaggatan 9
Phone: +46 (0)23-930 00
E-mail: [email protected]
Länsförsäkringar Värmland
Box 367
SE-651 09 Karlstad
Visit: Köpmannagatan 2 A
Phone: +46 (0)54-775 15 00
E-mail: [email protected]
Länsförsäkringar Uppsala
Box 2147
SE-750 02 Uppsala
Visit: Svartbäcksgatan 44
Phone: +46 (0)18-68 55 00
E-mail: [email protected]
Länsförsäkringar Bergslagen
Box 1046
SE-721 26 Västerås
Visit: Stora Gatan 41
Phone: +46 (0)21-19 01 00
E-mail: [email protected]
Länsförsäkringar Stockholm
SE-115 97 Stockholm
Visit: Tegeluddsvägen 21
Phone: +46 (0)8-562 830 00
E-mail: [email protected]
Länsförsäkringar Södermanland
Box 147
SE-611 24 Nyköping
Visit: V Storgatan 4
Phone: +46 (0)155-48 40 00
E-mail: [email protected]
Länsförsäkringar Göteborg och Bohuslän
SE-404 84 Gothenburg
Visit: Lilla Bommen 8
Phone: +46 (0)31-63 80 00
E-mail: [email protected]
Länsförsäkringar Skaraborg
Box 600
SE-541 29 Skövde
Visit: Rådhusgatan 8
Phone: +46 (0)500-77 70 00
E-mail: [email protected]
Länsförsäkringar Östgöta
Box 400
SE-581 04 Linköping
Visit: Platensgatan 11
Phone: +46 (0)13-29 00 00
E-mail: [email protected]
Länsförsäkringar Älvsborg
Box 1107
SE-462 28 Vänersborg
Visit: Vallgatan 21
Phone: +46 (0)521-27 30 00
E-mail: [email protected]
Länsförsäkringar Gotland
Box 1224
SE-621 23 Visby
Visit: Österväg 17
Phone: +46 (0)498-28 18 50
E-mail: [email protected]
Länsförsäkringar Jönköping
Box 623
SE-551 18 Jönköping
Visit: Barnarpsgatan 22
Phone: +46 (0)36-19 90 00
E-mail: [email protected]
Länsförsäkringar Halland
Box 518
SE-301 80 Halmstad
Visit: Strandgatan 10
Phone: +46 (0)35-15 10 00
E-mail: [email protected]
Länsförsäkring Kronoberg
Box 1503
SE-351 15 Växjö
Visit: Kronobergsgatan 10
Phone: +46 (0)470-72 00 00
E-mail: [email protected]
Länsförsäkringar Kalmar län
Box 748
SE-391 27 Kalmar
Visit: Norra Långgatan 17
Phone: +46 (0)20-66 11 00
E-mail: [email protected]
Länsförsäkringar Blekinge
Box 24
SE-374 21 Karlshamn
Visit: Kyrkogatan 21
Phone: +46 (0)454-30 23 00
E-mail: [email protected]
Länsförsäkringar Göinge-Kristianstad
Box 133
SE-291 22 Kristianstad
Visit: V Storgatan 49
Phone: +46 (0)44-19 62 00
E-mail: [email protected]
Länsförsäkringar Skåne
Box 742
SE-251 07 Helsingborg
Visit: Södergatan 15
Phone: +46 (0)42-633 80 00
E-mail: [email protected]
JOINT COMPANIES
Länsförsäkringar AB
SE-106 50 Stockholm
Visit: Tegeluddsvägen 11–13
Phone: +46 (0)8-588 400 00
E-mail: [email protected]
Länsförsäkringar Liv
SE-106 50 Stockholm
Visit: Tegeluddsvägen 21
Phone: +46 (0)8-588 400 00
E-mail: [email protected]
Länsförsäkringar Fondliv
SE-106 50 Stockholm
Visit: Tegeluddsvägen 21
Phone: +46 (0)8-588 400 00
E-mail: [email protected]
Länsförsäkringar Bank
SE-106 50 Stockholm
Visit: Tegeluddsvägen 11–13
Phone: +46 (0)8-588 416 00
E-mail: [email protected]
Länsförsäkringar Hypotek
SE-106 50 Stockholm
Visit: Tegeluddsvägen 11–13
Phone: +46 (0)8-588 416 00
E-mail: [email protected]
Länsförsäkringar Fondförvaltning
SE-106 50 Stockholm
Visit: Tegeluddsvägen 11–13
Phone: +46 (0)8-588 400 00
E-mail: [email protected]
Länsförsäkringar Fastighetsförmedling
Box 742
SE-251 07 Helsingborg
Visit: Södergatan 15
Phone: +46 (0)42-633 98 10
E-mail: [email protected]
Länsförsäkringar Mäklarservice
Box 27120
SE-102 52 Stockholm
Visit: Tegeluddsvägen 21
Phone: +46 (0)8-588 490 00
E-mail: info.maklarservice@­
lansforsakringar.se
Wasa Kredit
Box 6740
SE-113 85 Stockholm
Visit: Tegeluddsvägen 21
Phone: +46 (0)8-635 38 00
E-mail: [email protected]
Agria Djurförsäkring
Box 70306
SE-107 23 Stockholm
Visit: Tegeluddsvägen 11–13
Phone: +46 (0)8-588 421 00
E-mail: [email protected]
Humlegården Fastigheter
Box 5182
SE-102 44 Stockholm
Visit: Birger Jarlsgatan 25
Phone: +46 (0)8-678 92 00
E-mail: [email protected]
Länsförsäkringar Sak
SE-106 50 Stockholm
Visit: Tegeluddsvägen 11–13
Phone: +46 (0)8-588 400 00
E-mail: [email protected]
länsförsäkringar Liv 2011 59
60 länsförsäkringar Liv 2011
Production Länsförsäkringar Liv AB in cooperation with Hallvarsson & Halvarsson.
Photo: Länsförsäkringar’s image bank. Print: TMG Sthlm., 2012. We print on environmentally friendly paper.
LFAB 09408-00 eng.